California should contract with armored car services to transport cannabis-generated tax money and study the idea of creating a public bank to serve the marijuana industry, according to State Treasurer John Chiang.

The recommendations came during a Tuesday news conference in Sacramento, where Chiang and members of his Cannabis Banking Working Group presented a 32-page report following their nearly year-long study into how to help marijuana companies access banking services.

Big banks don’t handle cannabis-related money because the drug remains illegal federally, a factor that figures to be a hurdle for the fast-growing industry. And the ideas put forth Tuesday might be stop-gap solutions until federal lawmakers come up with new rules that reflect the broader push toward cannabis legalization.

“The reality is that a definitive, bullet-proof 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,” Chiang said.

“But that is not an excuse for inaction.”

Chiang — who is running for governor in 2018 — formed a working group in December 2016 to explore options for addressing the cannabis industry’s lack of access to banking services.

Though eight states have legalized recreational marijuana and 30 permit medical cannabis, the federal government still classifies cannabis as a Schedule I narcotic on par with heroin. That means major banks and credit card companies won’t do business with growers, manufacturers and dispensaries out of fear they’ll be penalized for money laundering.

While some smaller banks and credit unions are filling that gap, surveys show a majority of marijuana businesses are still forced to operate in cash. That makes them targets for crime, with tales of dispensaries being robbed and workers harmed.

During a working group meeting in Humboldt County, Chiang said the majority of industry workers told him they’d had a gun pointed in their face at some point. The county also has one of the highest missing-persons rates in the state, he said.

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The lack of services also makes it tough for marijuana business owners to get loans and pay their taxes, which are expected to reach $1 billion a year after recreational marijuana sales to start Jan. 1.

With that date in mind, Chiang’s 18-member working group — which includes representatives from state agencies, financial groups and industry organizations — has held six public meetings throughout the state in the past 11 months, inviting nearly 50 experts to speak and taking public feedback on the issue.

The ultimate goal, the treasurer said, is either for cannabis to become federally legal or for Congress to pass legislation that would shield banks from penalties for serving the marijuana industry.

In the meantime, Chiang’s working group recommends four steps California should take “ASAP.”

— Contract with private armored car services to transport taxes and fees from marijuana businesses to banks. Chiang said that will make the process safer and more efficient for both taxpayers and tax collectors, who are now forced to process millions of dollars in payments in cash.

— Work with local governments to develop an online portal that shows compliance data for all legal cannabis businesses in the state, then make that portal available to banks. Khurshid Khoja, an attorney who’s part of the working group, said that should help banks feel comfortable that they’re operating within federal guidelines issued in 2013 that outline how financial institutions can legally serve the marijuana industry.

— Study the idea of creating a state-run public bank or other state-backed financial institution that could serve the cannabis industry. Talk of this option has brought out both supporters and skeptics, and previous efforts to make a public bank for marijuana businesses have either been dismissed as too pricey or shut down by regulators. Though the report points out more “cons” than “pros” with this option, Chiang said all options should be on the table.

— Lead a national lobbying group to pursue changes to federal banking laws. Chiang said a number of other states and California organizations have agreed to participate in the consortium to try and affect change in Washington, D.C.

Chiang reached out to the Trump administration in December asking for clarity on the banking issue and support in finding a solution. His staff said they never got a response back.

Though federal laws haven’t budged, some mainstream firms are starting to work with the cannabis industry — in large part because of pressure from California officials.

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State Insurance Commissioner Dave Jones launched an initiative earlier this year to encourage commercial insurance companies to cover the cannabis industry.

To get insurance, cannabis businesses have turned to the surplus line market, which includes carriers that are approved but not licensed by the state to provide coverage for companies that have been turned down by major licensed insurers. Those surplus line policies tend to be more expensive and have stricter requirements than licensed carriers, Jones said.

The risks posed by not having insurance became clear last month when wildfires ravaged cannabis farms in Northern California and left growers with millions of dollars in uninsured losses.

On Nov. 2, Jones announced that he approved the first commercial insurance company to sell cannabis business insurance. Golden Bear Insurance Company can now begin writing policies and offering coverage for cannabis business owners.

Jones said he hopes the Stockton-based company will be the first of many to serve the cannabis industry.

Chiang sounded optimistic too, insisting that the country continues to move forward with regulating cannabis despite opposition from some federal officials.

“We’re better today than we were yesterday,” he said. “We are making progress.”

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