On Tuesday – September 29, 2020 – Governor Gavin Newsom signed Assembly Bill 1525 into law. This bill will remove state penalties against banks that serve cannabis industry clients in California, the world’s largest legal cannabis market. In a signing statement declaring his support, the Governor highlighted the bill’s “potential to increase the provisions of financial services to the legal cannabis industry.”
Thank you to Govenor Newsom for signing AB 1525 (Jones-Sawyer), which will incentivize banks and credit unions to provide banking services to the cannabis industry. @GavinNewsom @R_JonesSawyer #cannabisbanking pic.twitter.com/uJrKnLySry— Fiona Ma, CPA (@fionama) September 30, 2020
With the signing of AB 1525, SECTION 1. Chapter 24 (commencing with Section 26260) will be added to Division 10 of the California Business and Professions Code.
CHAPTER 24. Information Sharing with Financial Institutions
26260. (a) An entity that receives deposits, extends credit, conducts fund transfers, transports cash or financial instruments, or provides other financial services does not commit a crime under any California law, including Chapter 10 (commencing with Section 186.9) of Title 7 of Part 1 of the Penal Code, solely by virtue of the fact that the person receiving the benefit of any of those services engages in commercial cannabis activity as a licensee pursuant to this division.
To facilitate the provision of financial services to licensed cannabis industry operators, AB 1525 authorizes a licensed cannabis business owner to request, in writing, that a state or local licensing authority, state or local agency, or joint powers authority share the licensee’s application, license, and other regulatory and financial information, as specified, with a financial institution of the licensee’s designation. Per 26260. (b) (1), it is important to note that such a request must include a “waiver authorizing the transfer of that information and waiving any confidentiality or privilege that applies to that information.“
This waiver can also be withdrawn at any time by the licensee:
26260. b (3) A person who provides a waiver may withdraw that waiver at any time. Upon receipt of the withdrawal, the state or local licensing authority, state or local agency, or joint powers authority shall cease to share application, licensee, or other regulatory or financial information with the financial institution.
Similar to removing penalties against banks and other institutions providing financial services, per 26260. (d), AB 1525 also removes state penalties against accounting firms that provide services to licensed cannabis industry operators.
26260. (d) An individual or firm, that practices public accounting pursuant to Chapter 1 (commencing with Section 5000) of Division 3, does not commit a crime under California law solely for providing professional accounting services as specified to persons licensed to engage in commercial cannabis activity pursuant to this division.
If you have any questions or concerns regarding this important milestone in California’s legal cannabis regime, please contact the cannabis attorneys at Rogoway Law Group.