[Insight] California Senate passes legislation to create state-chartered cannabis banks

LOS ANGELES — The California Senate on Tuesday approved legislation to create state-chartered cannabis banks to help the industry get around restrictions on access to banking services.

Under the state legislation, which was approved by a vote of 35 to 1, private banks or credit unions can apply for a limited-purpose state charter so they can provide depository services to licensed cannabis businesses. The measure, Senate Bill 51, still requires approval of the Assembly and California Gov. Gavin Newsom to become law.

Marijuana businesses, including pot shops, are forced to deal predominantly in cash due to continued federal banking restrictions that make it nearly impossible for them to have bank accounts with federally chartered financial institutions. The passage in the nation’s most populous state could add pressure on the U.S. Congress to legalize banking for the marijuana industry.

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