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The Ultimate Cash Crop
By David Dayen
Posted December 3, 2019

public banks bypass the Wall Street middlemenIn January, days after Californians were first allowed to buy recreational marijuana in the state, Attorney General Jeff Sessions issued a memo to federal prosecutors instructing them not to shy away from enforcing federal pot laws. “Marijuana is a dangerous drug,” Sessions wrote. “Marijuana activity is a serious crime.”

Public banking can do more than just warehouse pot dollars. The model is fairly simple: A public bank takes deposits from city and state tax revenues, giving it a capital base of potentially tens of billions of dollars. Then it could leverage those deposits to make loans for local public works projects, small businesses, affordable housing, or student loans.

The idea originated in the United States during the Progressive Era, as reformers sought democratic solutions to the problems caused by the rapid industrialization, monopolies, and political corruption of the 1890s through the 1920s. Dormant for almost a century, the concept was resurrected after the Great Recession in 2008—floated as a way to check the Wall Street banks that had plunged the American economy into chaos and to fuel economic development with affordable loans at the local level rather than from Wall Street financiers. But more than anything, public banking is about regaining democratic control. America is the richest country in the world; public banking advocates want to put that wealth to work on behalf of the people who created it. More…