California Legislature—2015–16 Regular Session

Assembly Joint Resolution No. 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.

LEGISLATIVE COUNSEL’S DIGEST

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.

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

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

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

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

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

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

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

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

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