Nevada hopes to be the first state to create its own banking system for the booming marijuana industry, which has generated more than $150 million in tax revenue since 2017, according to Nevada Treasurer Zach Conine’s office. However, because the drug is still illegal under federal law, most banks will not accept these businesses as customers. This results in the industry being primarily a cash-based business which creates significant safety issues.
To try to get around the issue, Nevada is proposing a three-year pilot program that would allow marijuana businesses and consumers to deal in electronic tokens. Being Nevada, the system will function much like the casino industry, where players buy and bet with chips.
The treasurer’s office is spending the summer studying how this would exactly work. The initial proposal is for consumers and businesses to use an app to buy tokens, which could be used at any marijuana business and for paying taxes. Once the state is paid in tokens, they would be converted to cash.
The goal is to have this up and running by next July. As the federal government has been slow to act on bills, like the SAFE Banking Act that would provide banks a safe harbor in dealing with marijuana businesses, states are feeling the need to act. In Illinois, the legislature passed a bill currently awaiting the governor’s signature that would prohibit state bank regulators from punishing banks for working with legal cannabis businesses.
Read more about the proposal at Governing.