A federal banking official told a Santa Barbara crowd May 16 that she’s unsure if legislation will pass the U.S. Senate aimed at allowing financial institutions to handle funds deposited by cannabis industry-related businesses.
Kathy Moe, Federal Deposit Insurance Corp., FDIC, director in San Francisco, spoke to the annual South County UCSB Economic Forecast Summit crowd of several hundred at the Granda Theater.
She noted while recreational and medical marijuana are illegal by federal law, since California illegalized cannabis in 2016 Golden State banks are in a quandary about what to do with all the cash the industry is raking in these days.
Moe said it’s not easy for the FDIC to tell banks what to do about the current situation. She said they must determine the “level of risk before becoming a problem” in dealing with cannabis cash and monitor the situation.
She said more than 1,000 California banks have filed “suspicious activity reports” with the FDIC this year, mostly about cannabis industry revenue. “They have to decide, ‘What’s normal for this bank?’” Moe said.
She also noted that bank deposits are down a bit in her FDIC region, perhaps because more consumers use Venmo or Starbucks funds in their smartphones. Moe said consumers are relying less on brick-and-mortar banks.
Peter Rupert, head of the UCSB Economic Forecast, told the crowd the global fiscal outlook “sucks” because the largest European economies have declining gross domestic products.
He also said he has no idea when then the current second-longest U.S. economic expansion will last, “maybe until June.” But a recession is sure to follow, although exactly when, he said he “has no clue.”
Rupert noted Santa Barbara County retail sales are dropping, but wages are rising. He also said deaths are increasing in the county, births are declining as Santa Barbara city population has grown by 5 percent since the previous recorded year.
The economist also referenced the cannabis industry by noting marijuana grower make about $120,000 a year while dispensary workers get some $52,000.
The 2019 economic summit report made an interesting observation that number of Santa Barbara breweries has increase 38 percent since last year. That comes as California breweries have jumped only 27 percent, while nationally they have increased 23 percent.
The report said Santa brewery employees have increased almost 40 percent, but statewide and nationally only by around 16 percent. Santa Barbara is still wine country with wineries making up 87 percent beverage establishments while breweries are at just 9 percent.
Another speaker at the summit, Neil Kashkari, who made a failed bid for California governor, said he had his doubts that the nation is a maximum employment as federal officials claim.
Posted May 20, 2019