Cannabis Money and Public Banking


This fall, the prestigious Utne Reader picked up a great article from last April’s High Country News.

Banks and credit card companies blacklist cannabis businesses. Many dispensary operators have no choice but to stash money in home safes bolted to the floor. Security guards are hired and surveillance cameras installed. Armored cars deliver tax payments in suitcases and duffel bags stuffed with cash, a public safety liability that Oakland City Councilwoman Rebecca Kaplan laments as “spectacularly stupid.”

[Oakland City Councilmember Rebecca] Kaplan and activists in Oakland are inching toward a potential solution: a city-owned public bank that would service a chunk of California’s $7 billion cannabis industry and support the local economy without having to rely on Wall Street. The idea has recently packed community forums and sparked interest from neighboring Bay Area mayors. If it succeeds, Oakland will become the second place in America — and the first in nearly a century — to establish a public bank. Stacy Mitchell of the Institute for Local Self-Reliance, a community development nonprofit, predicts that “once one place does it, other places are going to follow much more rapidly.” The endgame is both a boon to the cannabis industry and a new economic model in which communities can call on local banks to fund infrastructure and low-interest loans.


Matt Stannard of Commonomics will be testifying on August 10 before California State Treasurer John Chiang’s Cannabis Banking Working Group, in a meeting focused specifically on public banking. Marc Armstrong, also of Commonomics, will join Stannard for the question-and-answer portion. Stannard calls this — legitimately — the biggest official meeting about public banking — ever. Read his letter about the upcoming meeting.


Some states that have legalized marijuana are encouraging minorities to enter the growing cannabis industry after years of drug enforcement that had a disproportionate effect on black and Hispanic communities.

The quotation above is from a May 31, 2017 Associated Press article which discusses current efforts in seven states (including California, Colorado, and West Virginia) to redress some of the inequity in drug arrests by making cannabis business opportunities available to African-American and Hispanic residents.


March, 2017: The New York Times is paying attention to California’s cannabis money.

Those working in the industry are constantly reminded of the federal government’s power to intervene in their business dealings, including severely limiting their access to the banking system.

“They can come in and ruin your whole life,” said [Sam] Edwards, the marijuana entrepreneur. “They can throw you in prison, take your property.”

Yet, like so many others in the cannabis industry here — there are an estimated 9,000 growers in Sonoma County — Mr. Edwards is pressing ahead with his company, which specializes in growing and selling pesticide-free cannabis products. And he is planning more cannabis and wine pairing dinners.

From Marc Armstrong of Commonomics:

… while it may be considered legal on a state basis, marijuana remains a federally classified Schedule I drug, making it illegal for federally regulated banks to accept deposits earned from cannabis.

So what’s a Sonoma County pot grower, distributor, edibles manufacturer or investor to do?

It’s simple: support the creation of a Public Bank of Santa Rosa, one that is operated and run by the city and whose mission will be to redirect the bank’s credit back into the community through low-interest development projects. A public bank is a win-win: people connected with the cannabis industry won’t have to cart duffel bags filled with cash up and down Highway 101, and county residents will gain from a new source of robust community credit.

Everything Marc Armstrong says applies to Oakland, but more so, because Oakland is bigger.

Writing with Michael Levitin, Armstrong also provided an op-ed piece for the Santa Rosa Press-Democrat.

In order to solve the cannabis cash problem, the public bank will also accept marijuana-related deposits. This “excess” cash can be picked up daily and placed in Federal Reserve vaults and credited to marijuana-related business accounts in the public bank. A web interface will allow account holders to transfer this money to their other deposit accounts with private banks or credit unions also located in California. The bank will need to ensure rigorous compliance with the DOJ’s guidance memo on accepting deposits from all the marijuana-related businesses it serves. Documentation of the origin of the cash will be required to be completed by the marijuana-related businesses before a cash pickup occurs. Enabling smartphone apps that report on specific transactions can help. Other stipulations and practices will be enforced by the bank so that the rudimentary standards identified by the DOJ guidance memo can be enforced. It can also establish best practices in partnership with the primary bank regulatory agencies (the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency) and the DOJ.