Local news outlets are reporting that Citizens Bank last week told customers with connections to the marijuana industry that their accounts would be closed.

One of those customers was Massachusetts Grower Advocacy Council President Peter Bernard, who also runs the organization The Harvest Cup Inc., a New England cannabis competition culminating with an expo featuring speakers, demonstrations, vendors and the reveal of all the winners.

“It’s really hard to find a bank,” Bernard told the Massachusetts MetroWest Daily News. “When we found Citizens, it was like the eighth bank we went to.”

Because banks are federally insured and marijuana is still illegal at the federal level, most banks are staying away from the business, concerned they might violate federal law.

Megan Griffin, vice president of external communications at Citizens Bank, said the company does not comment on customer accounts, but that the bank’s current policy is not to serve the marijuana industry.

California State Bank Proposal

The Senate Banking and Financial Institutions Committee of the California State Legislature on Wednesday recommended a bill that would establish a new, limited-purpose state charter for privately financed banks under a program that would be overseen by the state Department of Business Oversight.

The Los Angeles Times reports that the measure would allow cannabis firms to deposit money in state-licensed banks, which would issue checks to the businesses for use in paying rent and state and local taxes and fees, as well as for paying vendors for goods and services provided to their businesses. The marijuana businesses would also be allowed to buy state and local bonds.

“The question becomes, ‘With that amount of cash, what do you do?’ – because you can’t deposit it in a bank,” Sen. Bob Hertzberg (D-Van Nuys), who introduced the bill, said during a legislative hearing Wednesday. “We are faced with a significant public safety challenge.”

The recommendation comes just days after President Donald Trump indicated that his administration would not crack down on recreational marijuana in states that have voted to make it legal. California legalized the sale of recreational marijuana on Jan. 1; the industry is projected to grow to $7 billion annually by 2020.

“I’ve spoken to these companies about the problems their businesses face and until last week, many were under constant threat of getting busted by the feds,” Hertzberg said. “If the risk of federal intervention is eliminated, cannabis businesses will feel more confident about opening an account with our limited state charter.”