Green Banking Proposal
According to an article in Sunday’s December 17th, 2017 Los Angeles Times, the legalized marijuana industry is projected to grow to $7 billion by 2002. In preparation, California, banks, and federal regulators are working together to create a “green banking system.”
Under this new system, one bank would be designated as a central repository to hold accounts from other banks that are doing business with marijuana firms. This model is similar to an existing structure that supports credit unions.
In January, cannabis businesses will be receiving, storing, and transporting billions of dollars in cash for paying employees, suppliers, state and local taxes. Robberies and potential violence over the unsecured cash has triggered concerns about public safety, and promoted officials in Governor Brown’s administration to meet with representatives of 65 banks and credit unions.
The goal is to create a network of financial institutions that would accept money from marijuana businesses in a manner that would guarantee federal banking regulators the cannabis industry money is subjected to special tracking, oversight, and transparency.
Since the federal government classifies marijuana as an illegal Schedule 1 narcotic, federally regulated banks have refrained from receiving their deposits. The article stated that by establishing a special clearinghouse, California would provide a second level of compliance oversight by assigning examiners to ensure special restrictions set by the federal government are followed, suspicious activity reports are filed, and the number and scope of the transactions through the central bank are tracked. This would be the first system to do this.
Jim Brush, president and CEO of Summit State Bank in Santa Rosa said, “It will probably work.” He commented that banks already do business with federal and state governments who accept taxes directly from the industry.
The banks’ board of directors must approve this proposal to voluntarily participate in the network. If they do, the financial institutions would then be responsible for designing the system and establishing contracts.
If adopted, consumers will be able to pay with credit cards, and I won’t have to write a virtual check to receive my cannabis-based skincare products, (which I highly recommend).
I called Janet Schriever, Founder of CRAVE Skincare, (www.CRAVESKINCARE.COM) and asked her opinion about the green banking proposal. She said, “I can’t begin to tell you what a headache it has been selling skincare products. That banking system would be great, and I hope to do that soon.”