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California in talks to create bank network to serve marijuana market

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California in talks to create bank network to serve marijuana market

The state of California is talking with banks and federal regulators amid plans to create a network of financial institutions that would serve the state's marijuana market, which is expected to grow to $7 billion per year in 2020, the Los Angeles Times reported Dec. 17.

California will legalize recreational and medical marijuana sales starting Jan. 1, 2018. Under federal law, however, marijuana remains illegal.

According to the news source, state officials have met with 65 banks and credit unions regarding a proposal to designate a central correspondent bank that would hold the accounts of other banks that serve marijuana companies. The setup would allow California to provide a second level of compliance oversight over the cannabis industry.

Peter Williams, deputy secretary and general counsel for the state's Business, Consumer Services and Housing Agency, told the publication that the move would not require legislation.