The Morning Report
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Over the holiday weekend, Assemblywoman Lorena Gonzalez expressed her frustration with a new federal practice of releasing asylum-seeking families into San Diego by essentially dropping them off on the street with no resources. Gonzalez spent her Christmas volunteering at the shelter for migrants that several organizations have been operating as part of the San Diego Rapid Response Network.
“I am not used to feeling so helpless when it comes to public policy, but the actions by our federal government at the border, with asylum seekers and migrants on both sides has been totally unacceptable, cruel and inhumane,” Gonzalez wrote. “(Why drop families off with no help at night in our district?) But, my calls to the [Customs and Border Protection] go unanswered. My letters and pleas to the Governor have been denied.”
These families have been processed by immigration officials after entering the country either through a port of entry, or after crossing between ports of entry and being arrested by Border Patrol. They have all passed “credible fear interviews,” the initial step of the asylum process, have court dates and many are being released with ankle monitors to relatives or other sponsors.
Immigration and Customs Enforcement previously reviewed migrant families’ post-release plans, ensuring they had travel arrangements to connect with a sponsor, but that has stopped. The agency has said it no longer has the resources to review the plans, because of the uptick in families arriving at the border. Most of the arriving families don’t intend to stay in San Diego, but must find their way from San Diego to other parts of the country. Many have been released exhausted, with health ailments or without adequate clothing for the winter. They also rarely have money, a phone with which to contact their family or sponsor and don’t speak English.
“I’m frustrated because, first of all, this is a problem created by and in the purview of the federal government,” Gonzalez told me this week. “That being said, we know the federal government just doesn’t give a shit.”
San Diego is already facing a migrant shelter crisis – and officials worry a public health crisis could follow.
Sen. Toni Atkins expressed similar frustrations earlier this month: “I am watching with growing concern as thousands of migrants are released into the San Diego community in the middle of the night without so much as a meal to sustain them for one evening,” she wrote in a statement. “Clearly, the federal government has abandoned all responsibility on this matter, and it is incumbent upon us to step in and find a solution.”
Gonzalez earlier sent a letter to Gov. Jerry Brown requesting that a state-controlled armory in National City be used as a sort of triage shelter where families could stay temporarily to get medical care and make arrangements to go to their final destination. The request was denied, but she said she’s already started talked with Governor-elect Gavin Newsom, and hopes he’ll have a different answer.
The armory was used in 2016 when San Diego saw an influx of Haitian immigrants coming to the border who similarly needed temporary shelter.
“I spoke with the governor-elect yesterday, and he wants to take a more proactive approach,” Gonzalez said Thursday.
Gonzalez also expressed frustration that the county and city governments in San Diego have seemed unwilling to help.
“I don’t think there is a lot of desire to come up with a solution,” she said. “I am part of the state government, and we’re doing everything we can. I can’t single-handedly fix this. I’m frustrated by all the finger-pointing, the lack of communication.”
The situation now is also unique, she said, because both the state and county governments are in transition, as newly elected officials wait to start their terms – officials who might be more inclined to provide resources for the migrants.
No Banking Solutions in Sight for Marijuana Businesses
One of the biggest issues facing California’s newly legal cannabis industry is its inability to access banks.
Since cannabis is still illegal at the federal level, marijuana business owners have trouble opening bank accounts, since banks answer to federal regulators. Having an entire, lucrative industry that runs on cash is a significant public safety concern, as industry employees and even state employees collecting taxes in cash could be targeted by criminal organizations.
On Thursday, the California State Treasurer’s Cannabis Banking Working Group heard findings of a study commissioned to determine whether California could potentially start a state-run or state-backed financial institution to provide financial services to the cannabis industry.
William Roetzheim, the founder and CEO of Level 4 Ventures Inc., which put together the study, told the group that his team considered three possible options for a state solution, but that none of them are appealing.
Roetzheim said they looked at 29 cases of public banks that have been chartered in the United States. In 27 of those 29, public banking failed. Of the two examples that haven’t, one, the Territorial Bank of Samoa, was just started in 2018, so it’s too soon to evaluate its success.
The other, the Bank of North Dakota, was formed shortly after the Federal Reserve had been formed, so it didn’t face the same regulatory burdens. It also cost $32 million to initially start and took 25 years to become profitable. It also was primarily banking farmers, rather than an industry that is illegal under federal law.
“We don’t see that as a guarantee that we can do something similar in California today,” Roetzheim said.
He presented three banking approaches: A bank set up to exclusively provide banking services to the cannabis industry; a bank that primarily provides banking services to the cannabis industry but that also offers banking services to other individuals and businesses; and a correspondent bank that provides banking services to other commercial banks.
None of the three options was financially sound for the state. The state could expect to spend up to $35 million on start-up costs, would likely lose money for a while and by the time it might start making enough money for the state to get receive net dividends (in an estimated 25 to 30 years), federal regulations could have already changed and cannabis-specific banking may no longer be needed, so the bank could close to due decreased business demand.
And if the federal government ever decides to start aggressively enforcing laws around cannabis, the bank could be closed and its deposits subject to confiscation. Even a state-run bank would still require some approval from the federal government, and chances are federal regulators will not issue a master account to the bank, which is necessary for the bank to open and conduct basic banking functions such as wiring funds.
The state attorney general’s office echoed the concerns in a letter about the legal feasibility of a public bank.
“In sum, a public cannabis financial institution would unavoidably incur a high risk of criminal penalties and face other legal impediments that cannot be eliminated,” a deputy attorney general wrote in the letter.
Roatzheim recommended the state should designate a lead agency or group to continue to study and research short-term solutions, encourage existing financial institutions to offer cannabis-related banking services and lobbying or judicial action to achieve regulatory reform at the federal level. He estimated such efforts would cost about $2 million.
“The only long-term solution is federal change,” Roetzheim said. He also added that if the state doesn’t do anything, the cannabis banking problem “will slowly resolve itself.”
Golden State News
- Another day, another round of hand-wringing over the state of the Republican Party in California. (Sacramento Bee)
- Proposition 13 has always been thought to be untouchable – but that’s changing. (San Francisco Chronicle)
- Gov. Jerry Brown has ordered new DNA testing in a high-profile Death Row case. (Los Angeles Times)
- What Hollywood gets wrong about California’s geography. (Vulture)
- It’s not the end of the year without a roundup of new incoming state laws. (Sacramento Bee)