In an effort to improve the lives of the people living in the city, L.A. considers a city-owned bank for weed businesses. When up and running, the bank will also support affordable housing. The proposal is a way of bypassing the laws and regulations that prevent cannabis businesses from being able to take out loans and creating accounts with national and interstate banks. Because of federal prohibition, such measures have become necessary to ensure the continued strength of this rapidly growing industry.
A Man With A Plan
Los Angeles City Council President Herb Wesson has a can-do attitude. In July, he announced his plan to create a city-based and city-owned bank that would serve the needs of the cannabis businesses in the city. The need for such a bank is due to the federal prohibition of the plant. Because of the Schedule 1 status, national banks are unable to offer these businesses financial services. As such, services like bank loans and bank accounts are inaccessible to weed businesses.
Due to the inaccessibility, the majority of cannabis businesses are cash-only operations. Even in states where cannabis is legal for both recreational and medicinal use.
Californians voted for the legalization of recreational weed in 2016. Sales will begin by next year. City Controller Ron Galperin has estimated that Los Angeles alone could rake in 50 million dollars in tax revenue from cannabis businesses during the first year of legal recreational weed.
We should also note that Herb isn’t just a fan of herb. The planned bank will also assist affordable housing companies. It will also be able to give loans to small non-cannabis businesses.
Meanwhile, in Oakland, California, a similar plan is underway. In June, the Oakland City Council passed a budget to fund a study to determine whether or not a city-owned bank would be right for them. Like Los Angeles, their bank would support affordable housing.
Final Hit: L.A. Considers A City-Owned Bank For Weed Businesses
The mere fact that Los Angeles is considering this bank is a major step for the cannabis industry. The point that Herb Wesson made about the majority of cannabis businesses solely operating on cash is a salient one. Having a bank back up cannabis businesses will further legitimize the entire industry. It could even pave the way for other cities and states with legalized recreational weed to do the same. Until the day cannabis is legalized nationwide, local banks and city governments could be forces of good in the industry.
Wesson said it best: “We in government are supposed to push the envelope, not protect the status quo.”