Close to Home: Put all that cannabis cash in a Santa Rosa public bank


With the passage of Proposition 64 to legalize recreational marijuana likely to happen on Tuesday, Sonoma County now needs to seriously ask what it will do with all the cash it generates from cannabis cultivation and sales. Because while it may be considered legal on a state basis, marijuana remains a federally classified Schedule I drug, making it illegal for federally regulated banks to accept deposits earned from its sale.

Just look at Colorado, where people are driving around and stashing away millions of dollars in cash because banks won’t take the money. Even without Proposition 64, Sonomans in the industry are hiding medical cannabis cash in freight containers buried in fields for lack of a better option.

 So what’s a Sonoma County pot grower, distributor, edibles manufacturer or investor to do? It’s simple: support the creation of a public bank of Santa Rosa, one that is operated and run by the city and whose mission will be to redirect the bank’s credit back into the community through low-interest development projects. A public bank is a win-win. People connected with the cannabis industry won’t have to cart duffel bags filled with cash up and down Highway 101, and county residents will gain from a new source of robust community credit.

In California, a charter city or county can define its own rules for governance through the provisions outlined in its charter. This means that charter cities and counties can provide water, electricity and other utilities. The city of Santa Rosa, as a charter city, has constitutional authority to develop and provide a range of services, from broadband internet for consumers to commercial banking for businesses.

Just as Sonoma County initiated the profitable renewable energy provider Sonoma Clean Power in 2014, Santa Rosa can open a public bank to serve California’s six North Coast counties. It will take the form of an independent organization, managed by bankers and overseen by public officials — and directed to provide commercial banking services for growers and retail businesses in the six counties likely to produce and sell much of the state’s recreational cannabis. There couldn’t be a safer harbor or a more locally productive use for the many millions of dollars the industry is expected to generate. The bank can provide other services, of course, and would have a commercial loan portfolio that would reflect different economic priorities.

 The U.S. Justice Department and the U.S. Treasury Department have each issued guidance memos instructing banks how to be compliant with federal law while still accepting money from sales of cannabis. Wall Street banks have been slow to take advantage of this legal loophole. But a publicly owned institution, safeguarded by public oversight, can effectively adopt the Justice Department’s guidance procedures to inject a new, powerful financial stream into Sonoma County’s economy.

A Public Bank of Santa Rosa would solve several problems at once. First, it would diminish some of the public safety risks that can result from too much loose and unbanked cash floating around. Second, it would reclaim significant tax revenue lost to unreported cash transactions (by many experts’ accounts, up to 30 percent of the revenue base in U.S. cities vanishes through unreported transactions). Finally, it could be a source of affordable credit for sound but underfunded infrastructure, housing and economic development purposes.

In August, when the Drug Enforcement Administration rejected entreaties to downgrade marijuana’s status as a Schedule I drug, it did not act with American communities’ financial interests at heart. The message was clear: You may legally grow and sell pot in your state but don’t expect Wall Street banks to break federal law by investing your proceeds.

So, starting on Wednesday, it could be up to local government officials to step up to the plate and figure out how to effectively create a safe harbor for money generated from cannabis sales. Your city council members have the power to effectively address this issue. Call or write to them and let them know that establishing a public bank makes a lot of sense.

The people have been way out in front of the politicians — especially federal politicians — on this matter. It’s time to encourage them to catch up.

The Friends of Public Banking will host a “Cannabis Cash & Public Banking” event at Odd Fellows Hall on Wednesday from 5:30 p.m. to 8 p.m. Speakers will include Omar Figueroa, Ellen Brown and Marc Armstrong. For more information, go to

Marc Armstrong is co-founder of the Public Banking Institute and president of Commonomics USA, a Sonoma-based educational nonprofit. Michael Levitin is a Sonoma County-based journalist.

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