Public Bank Can Solve Legal Marijuana Cash Problem

by John Repp

When Washington’s new recreational marijuana stores open, they will be cash-only. You cannot use a check or credit card to buy the pot or even the vast array of cannabis infused soda, oils, and sweets that will dazzle the first-time visitor. Cash only. Why? Because cannabis, while legal in Colorado and Washington State, is still illegal all over the United States. Private banks and even credit unions say they are afraid that they will be prosecuted for money laundering if they offer banking services to the new businesses. This creates a huge security problem for Denver shops like Starbuds well as a law enforcement problem for the local police. There have been armed robberies in Colorado. Washington State’s medical marijuana growers, processors, and shops currently face the same problem. What to do?

The Washington State Legislature had a chance to pass a very creative solution to this problem in 2014. Sadly, they did not have the vision or courage to act. Senator Bob Hasegawa introduced SB 5955 that would have set up a public bank which would handle marijuana business money. Hasegawa worked with the Governor’s office as well as with the state Liquor Control board which is charged with implementing the recreational industry in Washington. The effort would comply with Federal Department of Justice guidelines for a legal cannabis industry. The State wants to tax legal marijuana and does not want the industry to be cash-only. They want banks involved.

Hasegawa and a group of citizens have been working since January 2010 for a “state bank,” better named “a public infrastructure bank.” In response to the financial crisis of 2008 and the austerity our state is facing, a proposal was made to establish public banking in Washington. The concept has been proven for more than 90 years in North Dakota, in Germany and the BRIC countries as well as in times past in the U.S.. The public bank would hold Washington State taxes and fees until the money is needed to pay the bills. Then it would use that flow of money as a reserve to create credit to build needed schools, bridges, and sewer systems around the state. The public infrastructure bank is a way to provide new income for Washington State since the bank’s loan portfolio would create interest like any bank. This way the money would stay in our state. The infrastructure projects would be built by state agencies, cities, county, and school districts. The public bank would finance the projects at a lower interest than the private banks now do. In addition, the projects would create hundreds of good jobs around the state. The legislature has held hearings the last 4 years, but the committee chairs have never taken a vote so the bills have died.

Hasegawa and his citizen allies saw a unique opportunity after Initiative 502 passed, legalizing recreational marijuana. Why not establish a public infrastructure bank that would also be authorized to provide retail banking services to the new industry. If SB 5955 passed, you could write a check or use your credit card in the new stores.

Most people don’t think about what happens to their sales tax money, for example, after they pay it. The business where they shopped sends it to an account with Bank of America. Washington State does not have a vault in Olympia. They use the private banking system. The city of Seattle banks with Wells Fargo. Bank of America and Well Fargo are two of the huge Wall Street Banks that engaged in massive fraud before and after the financial collapse in 2008. This should be reason enough to change how we handle public money. But no, too many of our elected officials are blind to the plight of too many people in our state who have lost jobs and homes. They pretend there are no solutions. They don’t see that Wall Street Banks are the real job killers and destroyers of the American dream. Public banking is one way to start getting out of the morass that is our private, Wall Street dominated financial system. As a consequence, there are efforts in over twenty states to establish public banking.

Bob Hasegawa said once that when he talks to ordinary people about public banking, they get it right away. But too often when he talks with legislators in Olympia, their eyes glaze over. Are these people our representatives or not? If not, we need to find new people to represent us. Too many of the current legislators are beholden to big banks and corporations.

North Dakota got its bank in 1919 after a prolonged credit crisis when too many farmers were losing their land. Citizens started a membership organization called the Non-Partisan League (NPL) where if a candidate agreed to the NPL legislative agenda that included a public bank, NPL would support them. It did not matter what political party they belonged to. By 1919, NPL had control of all state-wide offices, both houses of the legislature and the State Supreme Court. That is the kind of political revolution we need to take back our state government. Moral Mondays in North Carolina is showing us the way to start such a movement: http://en.wikipedia.org/wiki/Moral_Mondays