After a year of meetings and hearings, California's working group on marijuana and banking issued its final report Tuesday. It's overarching conclusion? California can only do so much to entice banks and credit unions to open accounts for marijuana-related businesses.

“A definitive bulletproof solution will remain elusive until the federal government removes cannabis from its official list of banned drugs or Congress approves safe harbor legislation protecting banks that serve cannabis businesses from prosecution,” Treasurer John Chiang told reporters gathered at the state Capitol.

The report does recommend several approaches for the state as it barrels toward a legalized recreational market on Jan. 1—and plans for how to move the anticipated $7 billion in sales out of cash tills and into financial institutions.

Here are four takeaways from the report.

California won't soon open a state bank for cannabis.

When Chiang first launched the working group, he didn't offer much support for the idea of a public bank that could serve marijuana retailers shut out of traditional institutions. The final report doesn't endorse the notion either, recommending instead that the treasurer and attorney general conduct a “feasibility study.”

“We will do the research to see what legal, what regulatory, what financial obligations, what unresolved issues need to be answered so that we can go forward,” Chiang told reporters Tuesday.

John Chiang

The treasurer didn't put a timeline on completing the study—his term ends next year—or limit what types of banking institutions it would consider.

“We're not wedded to one form,” he said. “What we're concerned about is what the substance is and who's going to engage to make sure we can create a more enhanced and fully operational banking system in the state of California.”

There are plenty of obstacles to a public bank—including the need for a master account from the Federal Reserve, insurance and possible opposition from the banking industry.

“We don't understand how this bank would be treated any differently from any state or federally chartered bank” that is attempting to serve marijuana-related business clients, said Beth Mills, senior vice president of the California Banking Association.

Alameda County and several Bay Area cities are conducting their own public bank feasibility study.

Armored services could see a big boost in business.

Chiang wants armed contractors to pick up tax and licensing payments from unbanked, cash-heavy marijuana businesses and deliver them to secure counting facilities. The payments would then move to either a bank that accepts marijuana receipts or to a Federal Reserve site.

“Such an arrangement would address a number of barriers to the collection of tax and fee payments, and result in increased safety, would not require banks to engage in activities that expose them to greater risk than they are willing to take, and increase taxpayer compliance,” Chiang wrote in his recommendations.

The treasurer said his office has already been contacted by interested couriers. But some transport services have shied away from moving marijuana cash because of the drug's illegality at the federal level.

Is transparency the answer?

Chiang wants the state and local agencies to create a single portal aggregating data on cannabis businesses, including names of key personnel, product lists, sources of supply, financial records and citations for violations.

The idea, he said, is to offer hesitant banks enough information on growers and retailers so that they feel confident any accounts they open for marijuana-related businesses will be compliant with federal guidelines.

“Based on these guidelines, a handful of financial institutions are serving the cannabis industry in other states and it is probable some will do so in California as well,” Chiang said.

California will become a lobbyist.

The solution to opening bank doors to marijuana businesses will be found at the federal level, Chiang said. The treasurer is proposing a consortium of marijuana-legal states to advocate for changes in federal laws. A top goal would be the creation of a legal safe harbor for banks that serve cannabis customers in compliance with state laws.

Chang said five marijuana-legal states and associations representing bankers and the marijuana industry are on board.

The state treasurer's cannabis banking report is posted below.

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