California: Los Angeles votes to allow cannabis industry access to banks

Since the subprime crisis in 2008, the banking sector in the United States has been under strict control by federal regulators. As cannabis is still illegal at federal level, US banks are not inclined to support the cannabis industry despite its legality in some states, at the risk of exposing themselves to legal action.

The legal cannabis industry therefore has no access to traditional banking sector products and services such as payment systems, credit options or liquidity deposits. Businesses therefore operate largely on a cash basis, with inherent problems of traceability and public safety.

The SAFE bank act

The Secure and Fair Enforcement Banking Act is a bill that would prevent banking regulators from restricting and hindering banks' operations in the cannabis business. In short, the law would make it impossible to sue a banking institution solely on the grounds of a direct or indirect link with cannabis.

Last week, the City Council of Los Angeles, California, unanimously (12 votes to 0) passed a resolution stating its opinion on federal law. The resolution calls for the federal law to be changed and for the SAFE bank act. This is also the position of the Banking Coalition, created in July 2016, which brings together the banking associations of 20 states.

Since 2014 and at the initiative of the U.S. Attorney's Office, the Cole Memo, attempted to make banking in the cannabis sector compatible with federal regulations, but this measure was terminated this year, rekindling the debate on cannabis banking. a reform of the federal law. It seems that the only way to put an end to this legislative conflict would be to a Congress initiative and that's exactly what the Los Angeles City Council and the Banking Coalition are calling for.