In December, 2016, California State Treasurer John Chiang created a cannabis banking working group of members who hail from business and government – Lori Ajax, chief of the Bureau of Medical Cannabis Regulation; David Haithcock, executive director of the California Community Banking Network; Courtney Jensen, California and Nevada Credit Union League and 13 others – that just wrapped up their fifth meeting since their first meeting on December 19th in Sacramento.

A sixth meeting is planned in August in Los Angeles.

The topic? Banking in general, and California’s increasingly important role as one of the largest states to have legalized both medical and recreational cannabis, and the first state with perhaps the right catalyst for getting the federal government to act.

At the most recent meeting, on July 7 in San Diego, in his opening remarks, Chiang said that “there may be some magic in our efforts” because of California’s size, a comment that was echoed by some of the 11 stakeholders testifying before the group.

According to John Hudak, deputy director of the Center for Effective Public Management at the Brookings Institution, testifying in a panel alongside Aaron Smith, executive director of the National Cannabis Industry Association (NCIA) and U.S. Congressman Dana Rohrabacher (R-CA), the biggest question of federalism of our time is how cannabis is legal and illegal at the same time. “This question of federalism touches on a whole host of areas, and banking is one of them,” he said.

Hudak added that the stakeholders in the room were not the people that the working group is trying to achieve access to banking for. “This is a public health and public safety issue,” he said. “This is as much about business operating effectively and efficiently as much as it is making sure that this industry can be tracked and traced and kept honest, and can be regulated efficiently, so that the individual knows exactly what product they are getting and where it came from, and that the tax money they hand to that dispensary ends up in the treasury where it belongs.”

He said that California has the opportunity to be a thought leader in the banking issue, echoing another point the treasurer made in his opening remarks. “The state truly does, because the problem with banking is no different here than it is in Colorado or Washington or the medical states across the country,” Hudak said. “What California does is have the opportunity to use scale as a means to demonstrate policy benefits and policy realities and policy possibilities.”

Smith said that the political climate has changed dramatically in the last seven years. “On the banking issues specifically, there are very few outspoken politicians saying that cannabis should have banking, but we are not seeing any vocal opposition to banking,” he said. “It looks like we now have majority support on both sides of aisle to fix the problem, but the general dysfunction now is the challenge that we are facing.”

He said that he hopes for constituents in the state to lean on Senator Dianne Feinstein  (D-CA) to take the lead “not for cannabis but for public safety.”

“This is a public safety issue and we should see coalition of law enforcement, regulators, and tax collectors get behind this,” Smith said.

Hudak added that California needed to get its own house in order. “There are difficulties at the local level and difficulties at the state level,” he said. “So the first step is figuring out how to get everyone on the same page in order to show the federal government that we can do this right. They are not going be welcoming or warm up to a halfway approach. But if you can show a full system from the smallest local municipality up to the way in which the state does business that other states follow, that is going to be the example that prompts the federal government to make a move.”