Oakland will spend $75,000 on a study to see if creating a public bank in the city — in part to help cannabis businesses locked out of traditional banking by federal laws — is feasible.
The money is coming out of the city’s general purpose fund. The other $25,000 needed for the study is being fronted by the city of Berkeley, officials announced at the Sept. 19 Oakland City Council meeting, where the $75,000 expenditure was approved.
Though the span and scope of the study are being ironed out, its “major key components” will include the actual feasibility of a public bank, banking requirements, and the bank’s ability to provide community benefit lending and handle cannabis business deposits, according to the resolution to appropriate the money. The study will also cover the expected cost and governance structures.
The resolution to look into the study was introduced by Councilman Dan Kalb and Councilwoman Rebecca Kaplan just after last Thanksgiving. Since then, the city reached out to neighboring cities to gauge their interest in co-financing the study. The council is considering a regional approach.
Kaplan said at the council that in addition to Berkeley’s $25,000 contribution to the study, private donors have pitched in thousands.
The city issued a request-for-qualifications in February seeking consultants to conduct the study, and chose Global Investment Company, of Oakland. The 33-year-old company has written several publications on public banking and cannabis law, represents cannabis dispensaries throughout the country and is a “leading expert on cannabis industry tax law,” according to the resolution.
In the original resolution to look into the study, Kalb and Kaplan said a public locally controlled bank would be more likely than commercial banks to invest in the community and its profits could contribute to the city’s general fund, reducing taxpayer burden.
Another benefit is that the bank would also provide a way for cannabis businesses to deposit their proceeds. Cannabis businesses primarily deal in cash, since they are illegal under federal law, which commercial banks must adhere by.
The bank could also provide low-cost financing to help create local jobs and provide credit for smaller businesses that struggle to get financing from commercial banks.
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Oakland resident Jane Kramer said at the meeting she’s concerned that creating a public bank that heavily caters to cannabis businesses could put those business owners in an unfair place of power over the city.
“Is this not a case of jumping from the frying pan into the fire, given that you are willing to risk council integrity in that the sole investment source, i.e. sellers of marijuana, would come to control the public’s money and therefore council policy in order to advance their own self-interests?” Kramer said.
Susan Harman, with advocacy group Friends of the Public Bank of Oakland, commended the council’s decision to approve funding for the study. At the meeting, she held up a stuffed-toy dragon head as a metaphor for the step forward.
“We have come before (the council) many times, and every time, like in the fairy tale when the hero comes before the king and asks for the king’s daughter’s hand in marriage, you’ve asked us to go kill some dragon somewhere that’s bothering people on the east side of town,” Harmon said. “We’re beyond the $100,000 so we can expand the scope of the study, which is wonderful, and that is the last dragon we’re killing. This is it folks, no more dragons. We are now starting a public bank, that’s what we’re doing next.”