California Cannabis Banking Bill Shelved for the Year and Other Legislative Highlights from the Appropriations Committee Hearings

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Today, the Assembly and Senate Appropriations Committees met and decided the fate of hundreds of bills including several that directly impact the cannabis industry. Here’s a run down of the most watched cannabis-related bills in the California State Legislature that were heard in one of today’s hearings:

Key Terms

  • Held in Committee – this means the bill is done for the year.
  • Passed to Assembly/Senate Floor – this means that the bill will be heard and potentially voted on before the full Assembly or Senate membership. I say “potentially voted on” because bills can still be placed on the “inactive file”, sent back to a policy or fiscal committee for review, etc., depending on a variety of reasons.

SB 829 (Weiner)Passed to the Assembly Floor

This bill would exempt qualifying compassion care programs from the cultivation and excise tax enacted by Proposition 64.

SB 930 (Hertzberg) – Held in Committee

This bill would have established a state-chartered banking system to allow financial institutions to offer basic banking services to businesses in the cannabis industry.

SB 1294 (Bradford) – Passed to the Assembly Floor

This bill was recently amended to establish the Cannabis Collaboration and Inclusion Act, which will require the Bureau of Cannabis Control (BCC) to establish an equity program beginning January 1, 2020, and requires the Bureau to provide technical support to state and local equity applicants and licensees.

SB 1409 (Wilk) – Passed to the Assembly Floor

This bill updates current law related to the production and cultivation of industrial hemp, and allows the California Department of Food and Agriculture (CDFA) to establish and implement an agricultural pilot program.

AB 1863 (Jones-Sawyer) – Passed to the Senate Floor

This bill amends California’s personal income tax law to allow taxpayers to deduct ordinary and necessary business expenses related to commercial cannabis activity.

AB 2641 (Wood) – Held in Committee

This would have allowed the BCC to issue a temporary retailer license for cultivators and manufacturers to sell their products directly to consumers at events.

Friendly Reminder: Public Comments on Proposed Statewide Cannabis Regulations Due by August 27.

Information regarding the regulations proposed by the BCC, CDFA, and the Department of Public Health can be found by clicking here on this link.


If you are interested in submitting comments on the proposed statewide regulations and need help, or have questions about any of the bills mentioned above, please contact us at info@thecannabisfile.com or by clicking here.

Would a California State-Chartered Banking System Solve the Industry’s Cash Crisis?

Recently, SB 930 (Hertzberg), was amended to created a state-chartered banking system in California that would allow banks to offer basic services to cannabis businesses.

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Photo by Fabian Blank on Unsplash

Under the bill, banks that are not a part of the federal banking network would be allowed to apply for a license through the Department of Business Oversight. This license would allow a bank to 1) create accounts; 2) accept deposits; 3) issue “special purpose” checks; and 4) join in a network with other state licensed banks. Account holders could use the special purpose checks to pay taxes, rent, and vendors, and invest in state and municipal bonds.

For many in the industry, SB 930, comes as a welcomed solution to the cash-crisis that plagues the industry. However, despite it’s promise, the largest obstacle to a long-term functional banking solution remains: the federal government.

In 2013, U.S. Deputy Attorney General James Cole issued guidance, commonly referred to as the “Cole Memo” that said the federal government would not prosecute marijuana businesses where state’s had created a strong regulatory system, and kept the drug away from children, other states, and profits away from drug cartels.

In 2014, the U.S. Treasury issued guidance that said it would not charge banks with a federal crime for offering services to the industry as long as they ensured the businesses were following all state rules and the directives laid out in the Cole Memo.

Colorado and Washington, both early adopters of legal adult-use, used the guidance provided by the Cole Memo to encourage banks to engage with the industry. In doing so, the banks in these states adopted stringent requirements and invested heavily in compliance staff. The result of these actions was twofold: 1) banks turning down more accounts than opened because the businesses were not fully compliant with state law, thus violating the directives of the state law and the Cole Memo; and 2) higher banking costs for the account holder to cover compliance overhead and longer delays in processing basic banking transactions.

With the recent repeal of the Cole Memo and the Trump Administration’s lawsuit against California’s “Sanctuary State” laws, it’s not impossible to assume that the federal government would use every leverage point, including heavy enforcement and large penalties to serve as a strong deterrent for any bank, state-chartered or not from servicing the industry.

For businesses in the industry, it’s almost impossible to predict how a banking system such as the one created by SB 930, would work, and that’s assuming the bill passes the Legislature and is signed by the Governor. However, the experience from many businesses in Colorado and Washington is a timely reminder that if this bill does become law, banks will require that each account holder is in 100% compliance with all laws and regulations for all the businesses in the supply chain. Remember, one unlicensed link in the chain could place your business license in jeopardy.

Now is the perfect time to review your business plan, licenses, and compliance with California’s rules to ensure your business is eligible to participate in the state-chartered banking system should it become law.

Questions? Please contact us here or at info@thecannabisfile.com.