Will California Create A State Bank For The Cannabis Industry?
Legal banking solutions may come from the State of California as they are considering creating a State bank for the industry. From their perspective, it makes sense they would consider this, the State is already collecting tax revenues from the sale of cannabis, now they may create a State-owned bank that will facilitate transactions. The article below states that the bank will be owned by the State and not private enterprise like most banks currently are. Taking control of cannabis banking just helps the State top up the coffers for the Treasury, this on top of the ridiculous amount they already tax on it.
http://www.latimes.com/business/la-fi-cannabis-bank-chiang-20180130-story.html
Governor candidate John Chiang (currently the Treasurer) said his office will look into what would be involved in creating a State-run bank for the marijuana industry. They are considering things like costs, regulation and other operational issues that would need to be considered before creating such a bank. If this banking entity is created, it would be one of just two in the nation, the other being the Bank of North Dakota.
While I am all for free markets and private enterprise operating in the cannabis industry, a State-run bank which is publicly owned may not face as much federal oversight and regulations than a private bank for the industry. Jeff Sessions had made it clear that they may come after the cannabis industry, so the State of California and it's bank may provide some relief and protection from Federal prosecution for cannabis businesses and the money held at the bank.
With all the cash being dispersed in the industry, the State of California is looking to create their own banking solution and I am sure many other States will follow. Many will argue that the banking should be left to the private sector or possibly to the Crypto space, but that would be a challenge on many fronts at the federal level. If the individual States create a banking system, then the risk is upon them to deal with the Federal Govt.
Whether or not the industry in the US needs a banking system, one that is hopefully out of the Federal Gov'ts hands... some will say that Crypto Currencies and Blockchain solutions could alleviate that problem. However, I just can't see the bankers allowing the Crypto space to take over an industry like Cannabis, especially with all the regulations in place.
Eventually, we knew the bankers would try and control the flow of funds in the Cannabis space (most of the big banks like HSBC already launder Cartel funds), now they are going to try and do it legally.
If this comes to light, then the need for a Cryptocurrency as a payment tool diminishes, that is what I have been saying for a while. The industry doesn't need another crypto token for payment of weed, cash and current cryptos already can facilitate that. What the Crypto space needs are real use cases that solve or improves business processes, record keeping or B2B/B2C transactions, a blockchain that is open and transparent. That is what we are working on with the Cannabis Internet. Payment tokens will have a good use case for other aspects of this industry, but one that's sole purpose is for payments really doesn't add value or fill a need. I will be writing a lot more about this in future posts on Steemit.
If only the government's around the world would just decriminalize cannabis versus legalizing it, then we could develop solutions, build businesses and participate in the cannabis industry without fear of prosecution. For now, we are getting legalization which is just another form of control, but at least it is some progress.
I am a free markets guy, but I do realize the banking sector is eyeing the industry if not already participating in it. In Canada, many banks and credit card companies already deal with Licensed Producers and process transactions. Bank of Montreal is the first bank to start investing in the licensed producers, I suspect we will see many more banks in Canada start funding deals. We have yet to see major fund managers, Institutional money or Sovereigns start participating in the sector, that is still coming... which is why I think the Cannabis industry still has tremendous upside when it comes to investing.
What are your thoughts, should the Banks in the US be allowed to operate in the cannabis space or do we leave it to the Free Market?
Vin Maru, Editor at www.investinmj.com
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CannaFacts
Here is a chart showing cannabis consumption and pricing from some of the major cities around the world. Source