It’s been a rollercoaster ride for California dispensaries as they’ve navigated numerous changes since legalization went into effect. But one thing that hasn’t changed is the cash-only status of most cannabis shops that can’t accept electronic card payments because banks still refuse to do business with them.
State lawmakers are not giving up on the issue. SB 930 died in the Assembly Appropriations Committee last year, but state Sen. Bob Hertzberg (D-Van Nuys) recently revived it as SB 51, which would basically mirror SB 930 and create a framework so private banks or credit unions could issue checks to dispensaries for paying taxes, rent and other business expenses. Dispensaries could also buy state and local bonds to help earn interest on their deposits.
Running a cash-only business can be a serious inconvenience. Even the state seems to agree. Last year, former California Treasurer John Chiang said the statute “stalemate” was making cannabis businesses “targets for violent crimes and putting the general public in danger” by forcing them to handle large quantities of cash.
Chiang also noted that it “created a nightmare for state and local government revenue-collecting agencies.” The California Department of Tax and Fee Administration does not accept cash payment unless an exemption is requested. One concentrates manufacturer said he has to schedule an in-person appointment to pay Uncle Sam.
The federal ganja ban has made most banks reject dispensaries as customers, but the Blue Wave on Capitol Hill is working to make Congress 420-friendly. Change at the federal level is crucial to enacting any meaningful reform since the Treasurer’s Office estimated that a state-backed cannabis bank would cost around $35 million to start and it’s unlikely that it would be approved by the feds.
Luckily, Congress last month introduced HR 1595, which aims to create protections for banks working with legit marijuana businesses.
But whether the Democrats’ bill makes it through the GOP-controlled Senate is another story, so the Golden State continues to pursue other solutions.
In a move befitting tech-saturated San Francisco, Assemblyman Phil Ting introduced a bill last month that would let pot shops at least pay their city and county taxes in cryptocurrency. Some California dispensaries and other marijuana businesses are already on board and using cryptocurrencies like Litecoin, Paragon, PotCoin, CannaCoin and PayQwick, so the practice isn’t unheard of, even though it’s not common yet.
Silicon Valley dispensaries haven’t kept pace with these developments, ironically, but that’s not to say some haven’t tried. Several years ago, Harborside on North 10th Street reportedly dabbled in (or at least considered) using the CanPay app, which uses a closed-loop system of banks already doing business with the weed world.
Now, however, all San Jose dispensaries only take hard cash or charge merchant fees that are higher than their customers.