Keeping pace with the ever changing state and federal regulations of being a cannabis employer is complicated. A misstep can be financially devastating.
Banking Support for California Cannabis Businesses.
With the start of the political season in full swing, California has a proposed bill, AB 1525, which would give the “go ahead” for banking institutions to work with cannabis businesses. Currently, if financial institutions or even accounting specialist assist cannabis industry-related businesses, they can potentially be charged with illegal activity. This bill, being addressed this week by lawmakers, would make it so that businesses in the industry can receive assistance without their aiding institutions being at risk of committing a crime.
The bill would essentially give permission to any state or local licensing authority, state or local agency, or joint powers authority, to share information from a cannabis business, granted they are allowed to do so from said business, with a financial institution such as a bank or accounting service agency.
California Department of Business Oversight commissioner, Manuel P. Alvarez, says that this bill could bring with it, a boom for the industry. Cannabis businesses have experienced turbulence regarding financial status, says Alvarez, and this bill will likely bring a state of continuity for the industry’s finances. Steps are being taken to reduce the opportunity for illegitimate businesses to move within the bill. Alvarez says many businesses typically deal in cash which would make it a bit more difficult to study their banking data. The bill has guidelines in place to deal with such financial data which can be reported to financial institutions.
Like any other industry, when the COVID-19 pandemic struck, the cannabis industry faced a crisis with many businesses facing loss of revenue or permanent closure. However, the move to make cannabis businesses “essential” during the crisis, has given the industry the push forward for law makers to make these businesses legal on the federal level. In fact, 34 state attorneys general penned a letter to Senate and House leaders outlining the need for stronger legislation for the cannabis industry. They proposed taxing those businesses in order to bring an influx to the government and to reduce the need for some businesses to rely on crime-prone cash-based models to continue to run their business.
Last year, 2019, the cannabis industry brought with it, $2.96 billion in California, with expectations of an increase to $3.7 billion before 2020 is over. Projected numbers for 2024 are $7.3 billion for the state of California, according to cannabis market analytics company, BDSA. With these projected numbers, the move toward legalization seems nearly obvious and with this election season, it is very likely that the cannabis industry will soon get the federal recognition it has been pushing for these past few decades. That is, at least, the hope of many supporters within the industry.