SACRAMENTO, Calif. (AP) – California lawmakers moved Wednesday to create a state-backed bank to handle the billions of dollars flowing from the newly legal recreational marijuana market.
The world’s largest legal recreational marijuana economy, created under a law that took effect this year, is projected to grow to $7 billion.READ MORE: Judge: California's Law Requiring Women On Corporate Boards Is Unconstitutional
The bill approved by a bipartisan 29-6 state Senate vote is designed to help pot entrepreneurs who usually deal in cash because most banks won’t accept money from a product that remains illegal under federal law.
SB930 now goes to the Assembly for consideration.
The bill would permit charter banks and credit unions regulated by the state Department of Business Oversight to provide limited banking services to pot-related businesses.
They could use the banks to pay rent, state and local taxes and fees, vendors within California for goods and services related to the cannabis business and to buy state and local bonds and other investments.READ MORE: Applications Now Open For $10K Grants For Sacramento Artists
“We’re not using the federal system, we’re not using the federal wire,” Democratic Sen. Bob Hertzberg of Van Nuys said of his proposal. “This is a short-term creative approach to deal with this extraordinary problem.”
He said the banks would suffice until what proponents hope will be an eventual change in federal law.
Hertzberg said the current system is dangerous because it requires pot dealers to conduct their business using cash, sometimes tens of thousands of dollars. He said he’s heard of some businesses burying or hiding tens of millions of dollars for lack of an alternative.
State budget officials project California will collect $600 million in cannabis taxes in the upcoming year, but that often requires the businesses to haul duffel bags full of cash to tax agencies.
The cash economy also makes audits and other standard oversight measures difficult.MORE NEWS: Carrie Underwood's 'The Denim & Rhinestones Tour' To Make Stop In Sacramento
Copyright 2018 The Associated Press.