SACRAMENTO—State Treasurer John Chiang is seeking guidance from President-elect Donald Trump and California’s congressional delegation about how the state should handle the finances of the nascent multibillion-dollar marijuana industry.
Although 57 percent of Californians voted in November to legalize recreational use, marijuana remains a controlled substance under federal law. The Obama administration backed off enforcing federal anti-marijuana laws in states that regulate marijuana consumption and sales. But Trump’s pick for U.S. attorney general, Republican Sen. Jeff Sessions of Alabama, opposes marijuana legalization.
“Of primary concern to my office are the limits federal rules place on the cannabis industry’s ability to effectively participate in the state and nation’s banking system,” Chiang wrote to Trump on Dec 1. “We have a year to develop a system that works in California and which addresses the many issues that exist as a result of the federal-state legal conflict. Uncertainty about the position of your administration creates even more of a challenge.”
Chiang also announced Friday he has created a large working group of bankers, marijuana industry representatives and government officials to come up with recommendations for tax collection and banking matters.
“The standoff between state and federal governments means a lot of businesses will be hauling around a lot of cash with no place to deposit their money and putting themselves at risk of robbery,” Chiang told reporters Friday.
Many large banks and credit unions in other states that have authorized marijuana businesses have balked at accepting industry receipts.
The Obama administration in 2014 issued guidelines designed to allow banks to serve legitimate marijuana retailers in states that legalized the drug. But the rules do not provide blanket immunity to financial institutions, only direction to prosecutors to focus on banks not following the strict guidelines. Banking associations have also complained the rules are costly and time-consuming and that they do not offer protection from other executive branch regulators.
Federal legislation to shield financial institutions that handle cannabis money from regulators has failed twice in recent years. Two California tax board members floated the idea last year of creating a state-run depository for marijuana businesses. That proposal, too, went nowhere.
On Friday, Chiang said he does not support launching a state bank solely to serve the marijuana industry.
“Establishing a state bank involves many deeper and critical and larger issues,” he said.
Asked about the state-federal marijuana conflict Thursday, state Attorney General-nominee Xavier Becerra said, “The circumstances under which the federal government was trying to intrude on California’s sovereignty” would dictate how his office would respond.
The treasurer’s working group, which includes the California Bankers Association and the California Growers Association, is expected to hold its first meeting later this month.