Los Angeles City Study Says Public Pot Bank Costs Could Be ‘Exorbitant’

City leaders have been studying the creation of a bank since July

How hard would it be for the city of Los Angeles to create its own bank? Very. That’s the upshot of a report released this week by the city’s chief legislative analyst, which identified a bevy of potential roadblocks, including the need for changes to state and city law and potentially “exorbitant” start-up costs. “Formation of [a public bank] under existing law and regulation would be a very difficult process, would be very costly, and would result in an institution that would not likely qualify to receive city business,” the report found. Los Angeles city leaders have been studying the creation of a bank since July, when Council President Herb Wesson unexpectedly included the idea in a speech laying out his priorities for his final term.

 The idea of public banks — financial institutions owned by cities or states — have long been supported by economic-justice groups and other advocacy organizations who see them as an alternative to the profit-motivated, investor-owned institutions. More recently, the idea has gained support among cannabis-business owners, who believe public banks may be able to serve them since most private banks are not willing to do so. Wesson, in his speech, envisioned the bank would make small business loans and help finance affordable housing, as well as provide services to cannabis businesses. “Do you know, we’ve got people that are going to go home tonight and sleep on a mattress that’s worth $2 million?” Wesson asked, alluding to cannabis business owners who stash cash at home instead of at a bank. “We have to figure out a way to make this industry work. We in government are supposed to push the envelope, not protect the status quo.”
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