Los Angeles voters Tuesday were strongly rejected the proposed creation of a municipal bank, something first suggested more than a year ago as a way to finance local entrepreneurs and affordable housing while also potentially creating a safe avenue for cannabis businesses to do their banking.
Early returns showed more than 61 percent of voters rejecting the idea, which was strongly backed by City Council President Herb Wesson.
“A municipal bank’s emphasis is on building stronger communities through smart, community-serving investments like affordable housing,” Wesson said. “We can no longer afford to do business with Wall Street banks more interested in making money on the backs of hard-working families than giving Angelenos tools to succeed.”
Since Wesson introduced the idea, the Ad Hoc on Comprehensive Job Creation Plan Committee has held several meetings on the topic, but many of the key details on how or if the city could actually create its own bank remain unanswered. Wesson’s motion acknowledged the uncertainty, noting, “There are many milestones that must be met in order to achieve the formation of a municipal bank. Changes in federal and state law are necessary and significant decisions regarding the governance structure of a municipal bank must be made.”
In December of last year, lawyers with the City Attorney’s Office told the committee the public bank would be subject to the same laws that any other bank is when it comes to marijuana businesses. And since marijuana is still a Schedule 1 drug at the federal level, accepting deposits from cannabis businesses could violate the Banking Secrecy Act and open the city and employees at the bank to potential liability, the attorneys said.
However, there are efforts both at the state and federal level to change laws that would allow cannabis businesses to freely use banks, including the SAFE Banking Act, which is under consideration by a Senate committee and would make banking legal for the cannabis industry in states that allow the sale of the drug.
No city in America has its own bank, and the only public bank in the nation is the Bank of North Dakota, which was created in 1919.
Meanwhile, voters strongly backed Measure E, which will align city elections with state election dates. Voters approved a similar measure in 2015 in an effort to boost participation in local elections, but since then the state has moved its primary from March to June. As a result, the city must change its election date again — and again ask voters for permission. The ballot measure included language allowing the city to make future election-date adjustments without having to return to voters.
Voters also approved Measure EE, which will accomplish the same as Measure E for Los Angeles Unified School District Board of Education elections.
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