California Bill Would Give Banks a Safe Harbor for Pot Business

Aims to improve access to financial, accounting services
Appellation for pot, flavor bans await lawmakers’ action
 
Banking institutions and accountants offering services to cannabis businesses would have a safe harbor in California law under one of the weed-related bills awaiting state lawmakers’ action when they return to Sacramento this week.
 
One measure ( A.B. 1525 ) says financial services, including public accounting firms, don’t commit a crime under any California law “solely by virtue of the fact that the person receiving the benefit of any of those services engages in commercial cannabis activity as a licensee” under state law.
The bill would permit, with the cannabis business license holder’s permission, a state or local licensing authority, state or local agency, or joint powers authority to share regulatory and financial information with a financial institution to facilitate commercial banking.
 
The California Credit Union League supports the bill, which the Assembly passed 68 to 1, and is scheduled for an Aug. 11 hearing in the Senate Banking and Financial Institutions Committee.
“It’s such a fluid situation right now that we’re not 100% sure what bills are moving, if it’s Covid-19 related or not,” said Robert Wilson, California Credit Union League vice president of state government affairs. “If this were a non-Covid year I’d say there was a very high likelihood it would pass.”
 
Consumers, businesses, and law enforcement have long been concerned about the lack of banking access for cannabis‐related businesses that primarily deal in cash, said Manuel P. Alvarez, California Department of Business Oversight commissioner. The department last October released risk  guidance  to help banks and credit unions that serve cannabis‐related businesses.
Pot is lucrative in California, with sales last year of $2.96 billion. The market is expected to reach $3.7 billion in sales this year and $7.13 billion in 2024, according to a forecast by BDSA, a cannabis market analytics company. Worldwide pot sales last year totaled $14.9 billion.
Another pending cannabis bills ( S.B. 67 ) would limit appellations of origin, or specific geographic designations, on labeling where cannabis is grown to weed that’s “planted in the ground, in open air, with no artificial light during the flowering stage of cultivation until harvest.”
The bill addresses the hot issue of terroir, the distinctive soil and climate conditions in a geographic area that impart flavor and depth often associated with wine. Proponents argue that weed grown in a greenhouse lacks the characteristics of that grown in the open. The bill is set for an Aug. 10 hearing in the Assembly Business and Professions Committee.
Other cannabis legislation:
 
  • A measure (S.B. 793) that would ban all flavored tobacco products and cannabis vaping products. The state Senate passed the bill 33 to 4, and it is scheduled for a hearing Aug. 4 in the Assembly Health Committee.
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  • A bill (S.B. 1244) that would make it easier for local law enforcement and prosecutors to send pot samples for testing, and is aimed at the illicit market. The state Senate passed the measure 30 to 0, and set an Aug. 10 hearing in the Assembly Business and Professions Committee.
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To contact the reporter on this story: Joyce E. Cutler in San Francisco at  jcutler@bloomberglaw.com
To contact the editors responsible for this story: Tina May at  tmay@bloomberglaw.com ; Heather Rothman at  hrothman@bgov.com