With the passage of Proposition 64 to legalize recreational marijuana likely to happen on Tuesday, Sonoma County now needs to seriously ask what it will do with all the cash it generates from cannabis cultivation and sales. Because 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 its sale.
Just look at Colorado, where people are driving around and stashing away millions of dollars in cash because banks won’t take the money. Even without Proposition 64, Sonomans in the industry are hiding medical cannabis cash in freight containers buried in fields for lack of a better option.
In California, a charter city or county can define its own rules for governance through the provisions outlined in its charter. This means that charter cities and counties can provide water, electricity and other utilities. The city of Santa Rosa, as a charter city, has constitutional authority to develop and provide a range of services, from broadband internet for consumers to commercial banking for businesses.
Just as Sonoma County initiated the profitable renewable energy provider Sonoma Clean Power in 2014, Santa Rosa can open a public bank to serve California’s six North Coast counties. It will take the form of an independent organization, managed by bankers and overseen by public officials — and directed to provide commercial banking services for growers and retail businesses in the six counties likely to produce and sell much of the state’s recreational cannabis. There couldn’t be a safer harbor or a more locally productive use for the many millions of dollars the industry is expected to generate. The bank can provide other services, of course, and would have a commercial loan portfolio that would reflect different economic priorities.
A Public Bank of Santa Rosa would solve several problems at once. First, it would diminish some of the public safety risks that can result from too much loose and unbanked cash floating around. Second, it would reclaim significant tax revenue lost to unreported cash transactions (by many experts’ accounts, up to 30 percent of the revenue base in U.S. cities vanishes through unreported transactions). Finally, it could be a source of affordable credit for sound but underfunded infrastructure, housing and economic development purposes.