California Legislature—2015–16 Regular Session

Assembly Joint ResolutionNo. 25

Introduced by Assembly Member Lackey

(Principal coauthors: Assembly Members Bonta, Cooley, Jones-Sawyer, Wilk, and Wood)

June 25, 2015

Assembly Joint Resolution No. 25—Relative to cannabis businesses.


AJR 25, as introduced, Lackey. Access to financial institutions.

This measure would memorialize the President and Congress of the United States to support legislation that will provide a comprehensive solution to allow banks and credit unions to perform financial services for marijuana businesses.

Fiscal committee: no.

P1    1WHEREAS, Cannabis use for medical purposes is legal in 23
2states and is legal for recreational purposes in four states and in
3the District of Columbia. The expansion of cannabis businesses
4across the United States requires action from Congress and the
5federal government; and

6WHEREAS, While many states have laws permitting various
7degrees of commercial activity using cannabis, it remains illegal
8under federal law. The conflict between federal and state laws has
9left financial institutions serving cannabis-related businesses on
10uncertain legal ground. Banks and credit unions are concerned that
11providing financial services for businesses selling a product that
12is illegal under federal law exposes them to possible charges of
13money laundering and drug trafficking; and

P2    1WHEREAS, Federal laws, including the Controlled Substances
2Act, the Bank Secrecy Act, and the Annunzio-Wylie Anti-Money
3Laundering Act, prohibit financial institutions from providing
4financial services to cannabis and hemp businesses. Directives
5from federal regulatory agencies such as the Federal Reserve, the
6Federal Deposit Insurance Corporation, the National Credit Union
7Administration, and the Office of the Comptroller of the Currency
8also prohibit bankers from accepting deposits from cannabis or
9hemp businesses; and

10WHEREAS, In February 2014, the United States Treasury’s
11Financial Crimes Enforcement Network, or FinCEN, in
12coordination with the United States Department of Justice, also
13issued a memo outlining expectations for compliance with the
14Bank Secrecy Act. Despite this progress, remaining uncertainties
15under current federal law still prevent banks and credit unions
16from accepting cannabis-based businesses as customers; and

17WHEREAS, The medical, retail, and hemp agricultural
18businesses are unable to accept credit or debit cards from customers
19because electronic payments are handled through the banking
20system. Therefore, transactions must be conducted in cash. Further,
21these businesses cannot deposit cash from sales into financial
22institutions. This is a major problem in California as many
23businesses now have hundreds of thousands of dollars in cash at
24their locations, which poses a public safety risk to businesses,
25employees, and customers; and

26WHEREAS, The lack of financial services makes paying taxes
27to local governments and the California State Board of Equalization
28a challenge because tax payments must be made in cash by
29cannabis-related businesses, leading to hundreds of thousands of
30dollars in cash being brought directly into government offices. It
31is difficult for the State Board of Equalization to audit cash-based
32businesses, especially when records of wholesale transactions are
33not available; and

34WHEREAS, Cannabis businesses cannot easily comply with
35California tax laws, which has led to a significant underpayment
36of revenue owed the state. In response, the State Board of
37Equalization launched the Cannabis Compliance Pilot Project in
38January 2015 to help determine both the degree of noncompliance
39with state tax law and the amount of lost tax revenue. However,
40state efforts alone cannot solve the problem; now, therefore, be it

P3    1Resolved by the Assembly and the Senate of the State of
2California, jointly,
That the Legislature respectfully urges the
3President and Congress to support legislation which will provide
4a comprehensive solution to allow banks and credit unions to
5perform financial services for cannabis businesses without federal
6retribution. The current system that requires cash-based transactions
7poses a risk to public safety and leads to reduced collection of
8taxes; and be it further

9Resolved, That the Chief Clerk of the Assembly transmit copies
10of this resolution to the President and the Vice President of the
11United States, to the Speaker of the House of Representatives, to
12the Minority Leader of the House of Representatives, to the
13Majority Leader of the Senate, to the Minority Leader of the
14Senate, and to each Senator and Representative from California
15in the Congress of the United States.