California Bill Proposal for Cannabis Business Banking Support
California’s new proposed bill, AB 1525, will permit banking institutions and accountants to provide cannabusinesses the support they deserve.
According to Bloomberg, lawmakers will address the bill this week once they return. This bill proposes to permit financial services, such as public accounting services, to assist commercial cannabis ventures without opening themselves to the risk of committing a crime.
Bloomberg reports that Manuel P. Alvarez claims that, if passed, the bill will encourage growth in the cannabis industry, an industry that’s currently characterized by uncertainty in the financial sector. Alvarez went on to discuss that since these cannabis companies commonly operate on a cash basis, the need for guidelines regarding how these businesses can obtain access to banking data and credit unions has become apparent.
Similar to other industries full of small merchants, the cannabis industry was hit by the COVID-19 pandemic, with numerous cannabis businesses facing potential closure as revenue fell.
But, in May, the U.S. House Democrats passed the HEROES Act proposed to facilitate access to loans and other traditional banking services for the cannabis sector. With this legislation, 34 state attorney generals wrote to the Senate and House Leaders to highlight the need for stronger legislation for cannabis-based businesses. This includes taxation for these businesses to steer them away from operating on the current cash-based business models.
Now that most Californians favor legalizing cannabis, the industry must become better established to encourage more legitimate business owners. Considering how in 2019, cannabis sales hit $2.96 billion in California, it’s safe to say this industry has even greater potential that’s being bottlenecked by current legislation.
Analytics company, BDSA, believes California’s cannabis market should hit approximately $3.7 billion by the end of 2020 and $7.3 billion within four years. This, of course, could be facilitated with the right framework put in place.