There is strong interest in finding a safe and reliable way to provide banking services to California’s legal cannabis industry, which generates millions of dollars each year. Many licensed cannabis businesses still struggle to access basic financial services, forcing them to operate in cash and creating public safety and compliance risks.

Public banks are often discussed as a possible solution, but under current federal law, this remains a challenge. Cannabis is still classified as a Schedule I controlled substance at the federal level. As long as that remains the case, public banks will likely not be able to serve cannabis businesses. Doing so could jeopardize their ability to receive approval from federal regulators, including the FDIC and the Federal Reserve.

Public banks in California are not chartered to serve private businesses directly. Their role is to manage public funds and work with local financial institutions to expand access to capital for public benefit. If federal law changes in the future, public banks may be better positioned to support cannabis-related businesses, but for now, they are unlikely to be a viable option for this sector.