It’s been an interesting few weeks for the idea of public banking — establishing banks owned by government entities as a values-based alternative to ‘Wall Street’ banks.
In San Francisco, where the city has charged a task force with exploring how to set up a city-owned bank, that task force is now looking into how the cannabis industry might provide a key source of deposits and clients that could help get a public bank off to a running start. California’s legal cannabis industry is forecast to grow from $2.8 billion in 2017 to $5.6 billion in 2020, but banks are loathe to deal with the industry for fear of violating federal rules that classify marijuana the same category as heroin — the result being a cannabis industry run mostly on cash.
San Francisco’s Municipal Bank Feasibility Task Force thinks a municipal bank might provide the industry an option for banking services.
“If San Francisco is also willing to take on the challenge, it could overcome the exorbitant cost of establishing a public bank and bring the city closer to divesting from institutions that fund fossil fuel corporations and abuse consumers,” reports the San Francisco Examiner’s Robyn Purchia.
It’s a big challenge to start a bank, even for a wealthy city home to major finanical industry giants. As Purchia reports, a public bank could require a minimum of $10 million in capital, approximately $1 million in startup costs and about $2 million for staff salaries, as well as additional funds for offices, branches, data processing, IT systems and security.
San Francisco Treasurer Jose Cisneros remains optimistic. “A public bank in San Francisco is feasible,” Cisneros told Purchia. “The more challenging question: Is it a good policy decision given the complexity, expense and risks?”
The answers to the same questions are