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A05978 Summary:

BILL NOA05978
 
SAME ASNo Same As
 
SPONSORBurdick
 
COSPNSR
 
MLTSPNSR
 
Add Art 17 §§250 - 265, amd §99-ii, St Fin L; rpld §16-ee, UDC Act
 
Enacts the New York state bank act creating the New York state banking authority and New York state bank to serve New York state residents and businesses currently underserved by banking institutions.
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A05978 Actions:

BILL NOA05978
 
03/24/2023referred to banks
01/03/2024referred to banks
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A05978 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A5978
 
SPONSOR: Burdick
  TITLE OF BILL: An act to amend the state finance law, in relation to enacting the New York state bank act; to repeal certain provisions of the New York state urban development corporation act relating thereto; and providing for the repeal of such provisions upon expiration thereof   PURPOSE OR GENERAL IDEA OF BILL: To create the New York Public Banking Authority for the purpose of char- tering the New York Public Bank. A portion of state tax revenue from the sale of legal adult-use cannabis products would be deposited into the Bank and used to finance loans to qualifying cannabis-related businesses and low-income residents of the state. The New York State Bank would also provide checking and savings accounts to low-income New Yorkers that lack access to private-sector banking services.   SUMMARY OF PROVISIONS:. Section 1 states that this act shall be known as the "New York State Bank Act". Section 2 amends the state finance law to add a new   ARTICLE 17 : THE NEW YORK STATE BANK.ct.   SECTION 250: LEGISLATIVE INTENT   SECTION 251: DEFINITIONS   SECTION 252: CREATION OF THE NEW YORK STATE BANKING AUTHORITY This section establishes the New York State Banking Authority. The authority shall be governed by five members appointed by the governor, the state comptroller, the attorney general, the temporary president of the senate and the speaker of the assembly.   SECTION 253: PURPOSE: This section states that the New York State Banking Authority will char- ter the New York State Bank.   SECTION 254: THE NEW YORK STATE BANK This section states the mission of the New York State Bank and outlines its responsibilities, including, but not-limited to: 1. Loaning a portion of state tax revenue received from the sales of legal adult-use cannabis products to provide eligible cannabis-related businesses and low-income individuals access to low-interest capital and loans; 2. Offering savings and checking account services to eligible low-income individuals that do not have access to traditional banking services or products because of immigration status, lack of literacy, high banking fees and or criminal records.   SECTION 255: BOARD This section establishes the board of the New York State Banking Author- ity as the primary governing authority of the bank. The board shall be composed of eleven board members appointed by the temporary president of the senate, the speaker of the assembly, the state comptroller, and the trustees of the authority. This section outlines eligibility require- ments for board members and general responsibilities of the board, including: 1. The development of a business plan for the bank; 2. The determination of initial capitalization requirements; 3. The development of a plan to provide banking services to cannabis-re- lated businesses and low-income New York residents; 4. The creation of criteria for approving, monitoring and evaluating loans; 5. The creation of transparency requirements and ethical standards for board members and employees of the bank; and 6. The appointment of a bank president, among other items.   SECTION 256: CAPITALIZATION This section provides that the bank shall be capitalized using a of portion of state tax revenue derived from the sale of legal adult-use cannabis products and deposits from low-income individuals whom open a savings and/or checking account with the bank.   SECTION 257: DEPOSIT OF FUNDS This section directs the state comptroller to deposit into the bank the state tax revenue from the sale of legal adult-use cannabis products that is necessary for the initial capitalization of the bank. This section also stipulates that deposits in the New York State Bank are to be guaranteed by the state of New York and shall not be insured through the federal deposit insurance corporation.   SECTION 258: INVESTMENT REQUIREMENTS AND REGULATIONS This section empowers the bank to: 1. Invest tax revenue from the sale of legal adult-use cannabis products for the financing of, construction, rehabilitation, and improvement of cannabis-related businesses; 2. Offer low or zero cost checking and savings bank accounts and loans to eligible residents of low-income individuals of the state; This section prohibits the bank from: 1. Buying, selling and/or accepting deposits of federal funds; and 2. Investing in certificates, notes, or bonds of the United States, among other items.   SECTION 259: FINANCIAL REGULATION This section grants the superintendent of the department of financial services the power to regulate and apply standards to the bank in the same manner as a state-chartered financial institution.   SECTION 260: REPORTING REQUIREMENTS This section mandates the bank president to submit publicly accessible, quarterly reports to the board of the bank and legislature.   SECTION 261: ETHICAL REQUIREMENTS This section prohibits board members and bank employees from receiving Loans from the New York State Bank. Board members and bank employees must follow all ethical rules and guidelines adopted by the board.   SECTION 262: FEES AND TAXES This section exempts the bank from paying state taxes and fees.   SECTION 263: BANK RECORDS This section provides that certain bank records are exempt from public disclosure pursuant to article six of the public officers law.   SECTION 264: TERMINATION OF OPERATIONS This section states that the New York state bank and the New York state banking authority shall be dissolved upon the determination of the board that the private banking industry can adequately service the financial needs of cannabis-related businesses and low-income communities current- ly underserved by banking institutions.   SECTION 265: SEVERABILITY Section 3 amends paragraph (c) of subdivision 3 of section 99-ii of the state finance law. This amendment diverts cannabis tax revenue-to the New York state banking authority and the New York state bank. Section 4 repeals Section 16-ee of the New York state urban development corporation act. Section 5 sets.the effective date.   JUSTIFICATION: The federal classification of cannabis as a Schedule I drug under the Controlled Substances Act of 1970 means most private banks and credit unions are unable to or refuse to service bank accounts held by canna- bis-related businesses. As a result, cannabis-related businesses are locked out of the banking system, forcing many of them to rely entirely on cash to conduct transactions. Being cash-oriented means cannabis-re- lated businesses not only struggle to raise capital but are dispropor- tionately susceptible to burglary of their property and makes their employees targets of violent robbery. In addition, cash transactions are not traceable by state and federal financial regulators, meaning cash- only cannabis-related businesses can be used to launder money derived from illegal activities. With the legalization of recreational cannabis use under the New York Marihuana Regulation and Taxation Act of 2021, cannabis dispensaries opening in New York, and their regulators, will undoubtedly face these problems. The establishment of a publicly owned and operated New York State Bank would alleviate these issues of capital financing, financial transparen- cy and public safety by providing a secure depository for the storage and lending of cannabis funds and tax revenues. Moreover, there are many low-income New Yorkers that lack adequate access to banking services in their communities. The provision of bank- ing services to these communities through the New York State Bank, including low cost bank accounts and loans, will ensure they can safely and securely store their money and have access to financing options that are legitimate alternatives to predatory lending practices, such as high-interest pay-day loans.   PRIOR LEGISLATIVE HISTORY: 2022 A9377 (Cahill)   FISCAL IMPLICATIONS: To be determined.   EFFECTIVE DATE: This act shall take effect immediately; provided, however, that upon the determination by the board that the private banking industry can adequately service the financial needs of cannabis-related businesses and communities underserved by banking institutions, it shall develop and execute a plan for the dissolution of the New York State Bank and the New York State Banking Authority.
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A05978 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5978
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                     March 24, 2023
                                       ___________
 
        Introduced  by M. of A. BURDICK -- read once and referred to the Commit-
          tee on Banks
 
        AN ACT to amend the state finance law, in relation to enacting  the  New
          York  state  bank  act;  to  repeal certain provisions of the New York
          state urban development corporation act relating thereto; and  provid-
          ing for the repeal of such provisions upon expiration thereof
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. This act shall be known and may be cited as the  "New  York
     2  state bank act".
     3    §  2.  The  state finance law is amended by adding a new article 17 to
     4  read as follows:
     5                                 ARTICLE 17
     6                           THE NEW YORK STATE BANK
     7  Section 250. Legislative intent.
     8          251. Definitions.
     9          252. Creation of the New York state banking authority.
    10          253. Purpose.
    11          254. The New York state bank.
    12          255. Board.
    13          256. Capitalization.
    14          257. Deposit of funds.
    15          258. Investment requirements and regulations.
    16          259. Financial regulation.
    17          260. Reporting requirements.
    18          261. Ethical requirements.
    19          262. Fees and taxes.
    20          263. Bank records.
    21          264. Termination of operations.
    22          265. Severability.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07659-01-3

        A. 5978                             2
 
     1    § 250. Legislative intent.  1.  The  legislature  finds  that  several
     2  communities  within  the state have been adversely affected by a lack of
     3  banking services to meet their financial needs. Low-income,  inner  city
     4  and rural communities are often left out of the banking system. Further-
     5  more,  individuals  without  lawful  immigration  status have difficulty
     6  accessing banking services, particularly when  the  process  requires  a
     7  social  security  number  or a form of government-issued identification.
     8  The state of New York has an interest in ensuring that communities  that
     9  are  underserved by banking institutions have access to banking services
    10  such as low or no cost savings and checking accounts,  loans  and  elec-
    11  tronic  banking platforms.  Providing banking services to these communi-
    12  ties will ensure they can safely and securely store their money and have
    13  access to financing options that are legitimate alternatives to predato-
    14  ry lending practices, such as high-interest pay-day loans.
    15    2. The legislature finds that a  group  with  insufficient  access  to
    16  banking services is the cannabis industry. The federal classification of
    17  cannabis  as  a  Schedule  I drug under the Controlled Substances Act of
    18  1970 means most private banks and credit unions are unable to or  refuse
    19  to  service  bank  accounts  held  by cannabis-related businesses due to
    20  federal money laundering statutes and  the  bank  secrecy  act.    As  a
    21  result,  cannabis-related  businesses  are  locked  out  of  the banking
    22  system, forcing them to rely entirely on cash to  conduct  transactions.
    23  Being cash-oriented leaves cannabis-related businesses disproportionate-
    24  ly  susceptible  to burglary of their property and makes their employees
    25  targets of violent robbery.   In addition,  cash  transactions  are  not
    26  traceable  by  state and federal financial regulators, meaning cash-only
    27  cannabis-related businesses can be used to launder  money  derived  from
    28  illegal activities.  Therefore, the legislature finds that the exclusion
    29  of  cannabis-related  businesses  from  the banking system constitutes a
    30  public safety and financial transparency issue.
    31    3. The legislature finds that the establishment of  a  publicly  owned
    32  and  operated  bank would alleviate issues of financial transparency and
    33  public safety by providing a secure depository for the storage and lend-
    34  ing of cannabis-related businesses funds and  deposits  from  low-income
    35  residents of the state.
    36    4. The legislature finds that in addition to increasing public safety,
    37  the  provision  of banking services to cannabis-related businesses would
    38  facilitate sustainable economic growth in  New  York  state.  The  legal
    39  cannabis industry is projected to grow by tens of billions of dollars in
    40  coming years. A state owned and operated bank can foster economic growth
    41  and capital investment and spur job creation in the cannabis industry by
    42  providing  collateralized  loans  to  communities underserved by banking
    43  institutions, including eligible and registered  cannabis-related  busi-
    44  nesses.
    45    5.  The  legislature  intends  to establish the New York state banking
    46  authority and the New York state bank to use a portion of the tax reven-
    47  ue received from the sales of legal adult-use cannabis products to serve
    48  low-income communities and cannabis-related businesses that  are  under-
    49  served by banking institutions.
    50    § 251. Definitions. As used in this article, the following terms shall
    51  have the following meanings:
    52    1. "Board" means the board of the New York state banking authority.
    53    2. "Authority" means the New York state banking authority.
    54    3. "Department" means the department of financial services.
    55    4.  "Superintendent"  means  the  superintendent  of the department of
    56  financial services.

        A. 5978                             3
 
     1    5. "Cannabis" means all parts   of the plant of  the  genus  cannabis,
     2  whether growing or not; the seeds thereof; the resin extracted from  any
     3  part  of  the  plant; and every compound, manufacture, salt, derivative,
     4  mixture,  or preparation of the plant, its seeds or resin. It  does  not
     5  include  the mature stalks of the plant, fiber produced from the stalks,
     6  oil  or cake made from the seeds of the plant, any other compound, manu-
     7  facture, salt, derivative,   mixture,   or  preparation  of  the  mature
     8  stalks (except the resin extracted therefrom), fiber, oil, or  cake,  or
     9  the   sterilized seed of the plant which is incapable of germination. It
    10  does not include hemp, cannabinoid hemp or hemp extract as defined    by
    11  section  three  of the cannabis law or any drug products approved by the
    12  federal food and drug administration.
    13    6. "State-chartered banking institution" means any bank, trust  compa-
    14  ny,  private banker, savings bank, savings and loan association, foreign
    15  banking corporation, or credit union. It does not include the  New  York
    16  state bank.
    17    7. "Comptroller" means the comptroller of the state of New York.
    18    8. "Bank" means the New York state bank.
    19    9. "Bank president" means the president of the New York state bank.
    20    10. "Low-interest capital" means funds that are loaned by the New York
    21  state bank to eligible and registered cannabis-related businesses.
    22    11.  "Low-interest  loans" means funds that are loaned by the New York
    23  state bank to qualifying low-income individuals.
    24    12. "Low-income individual" means a resident  of  the  state  with  an
    25  income  that  does not exceed two hundred percent of the federal poverty
    26  level.
    27    13. "Cannabis-related businesses" are New York state registered  busi-
    28  nesses  that  contribute  to the growth, production, transportation, and
    29  distribution of products containing cannabis.
    30    § 252. Creation of the New York state banking authority. 1.  There  is
    31  hereby created the New York state banking authority. The authority shall
    32  be  a  body  corporate  and politic constituting a public benefit corpo-
    33  ration.  The authority shall be governed by five trustees. One shall  be
    34  appointed by the speaker of the assembly, one by the temporary president
    35  of  the  senate,  one by the governor, one by the comptroller and one by
    36  the attorney general. The trustees shall serve the following terms:
    37    (a) The trustees appointed by the  legislature  shall  each  serve  an
    38  initial term of five years.
    39    (b)  The trustee appointed by the governor shall serve an initial term
    40  of four years.
    41    (c) The trustee appointed by the comptroller shall  serve  an  initial
    42  term of three years.
    43    (d)  The  trustee  appointed  by  the  attorney general shall serve an
    44  initial term of two years.
    45    (e) After the initial terms of the trustees have been  completed,  all
    46  trustees thereafter shall serve four year terms.
    47    2.  Each appointed trustee shall be a citizen of the United States and
    48  a resident of the state.
    49    3. Each trustee shall hold office until a successor has been appointed
    50  and qualified. At the expiration of the term of each trustee and of each
    51  succeeding trustee, a new trustee shall be appointed by the party  which
    52  appointed the outgoing trustee.
    53    4. In the event of a vacancy occurring in the office of the trustee by
    54  death,  resignation  or otherwise, a successor shall be appointed within
    55  forty-five days for the  remainder  of  the  term  by  the  party  which
    56  appointed.

        A. 5978                             4
 
     1    5. Three trustees shall constitute a quorum.
     2    6.  The  trustees of the authority shall serve without salary or other
     3  compensation, but each member shall be  entitled  to  reimbursement  for
     4  actual and necessary expenses incurred in the performance of their offi-
     5  cial duties.
     6    § 253. Purpose. The New York state banking authority shall charter the
     7  New York state bank.
     8    §  254.  The New York state bank. 1. The mission of the New York state
     9  bank is to serve low-income individuals and cannabis-related  businesses
    10  that  are  underserved  by  private sector banking institutions. To this
    11  effect, the bank shall be required to:
    12    (a) Create banking opportunities for  low-income  individuals  in  the
    13  state. This includes but is not limited to:
    14    (i)  offering  eligible  low-income  individuals access to savings and
    15  checking account services with nominal or zero minimum balance  require-
    16  ments and multiple options for proving identification; and
    17    (ii)  providing  banking services to low-income individuals who do not
    18  have access to bank accounts or products due to immigration status, lack
    19  of literacy, high banking fees, or criminal records;
    20    (b) Loan a portion of state tax revenue received  from  the  sales  of
    21  legal adult-use cannabis products, pursuant to paragraph (c) of subdivi-
    22  sion  three of section ninety-nine-ii of this chapter, and deposits into
    23  the bank from low-income individuals to provide eligible cannabis-relat-
    24  ed businesses and low-income individuals access to low-interest  capital
    25  and loans;
    26    (c) Do business with:
    27    (i) businesses licensed and regulated in New York state;
    28    (ii)  businesses licensed outside of New York state only if the bank's
    29  dealing with such entities does not violate federal and state  financial
    30  rules and regulations; and
    31    (iii)  state  chartered  and/or  licensed  financial institutions that
    32  comply with paragraph (d) of this subdivision;
    33    (d) Comply with the federal bank  secrecy  and  anti-money  laundering
    34  acts, also known as the currency and foreign transactions reporting act,
    35  and regulations and guidance relating to the cannabis industry issued by
    36  the  United  States  department of justice and federal regulatory bodies
    37  including the financial crimes  enforcement  network  or  any  successor
    38  body.  This includes, but is not limited to:
    39    (i)  establishing  an  effective  anti-money laundering act compliance
    40  program as prescribed by rule 3310 of the financial regulatory  authori-
    41  ty;
    42    (ii)  complying  with  customer  due diligence obligations in a manner
    43  prescribed by the financial crimes enforcement network;
    44    (iii) reporting certain currency transaction reports to the  financial
    45  crimes  enforcement  network  in a manner prescribed by its regulations;
    46  and
    47    (iv) filing quarterly suspicious activity reports with  the  financial
    48  crimes enforcement network in a manner prescribed by its regulations;
    49    (e)  Comply  with  state  regulations,  including regulations from the
    50  department of financial services, the office  of  the  comptroller,  the
    51  office of cannabis management, and the authorities budget office; and
    52    (f)  Comply with all state laws, including the banking law, the public
    53  authorities law, the cannabis law and the provisions of this chapter.
    54    2. In achieving its objectives, the New York state bank  shall  adhere
    55  to the following priorities:
    56    (a) vigorous ethical, accountability and transparency standards;

        A. 5978                             5
 
     1    (b) institutional robustness;
     2    (c) prudent financial and business practices;
     3    (d) long-term solvency;
     4    (e) sustained monetary returns on investments; and
     5    (f) insulation from political influence.
     6    §  255.  Board.  1.    The  New  York state banking authority board is
     7  created as the primary governing authority of the bank. The board  shall
     8  consist  of  eleven members. The temporary president of the senate shall
     9  appoint one member from each of the two largest caucuses of the  senate.
    10  The  speaker  of  the assembly shall appoint one member from each of the
    11  two largest caucuses of the  assembly.  The  comptroller  shall  appoint
    12  three  members  to  the  board with substantial managerial experience in
    13  banking and finance operations. The  trustees  of  the  authority  shall
    14  jointly  appoint  four  members  with  substantial community development
    15  banking experience.
    16    (a) The board members appointed by  the  temporary  president  of  the
    17  senate and the speaker of the assembly shall each serve initial terms of
    18  two years.
    19    (b)  The  board  members appointed by the comptroller shall each serve
    20  initial terms of three years.
    21    (c) The board members appointed by the trustees of the authority shall
    22  each serve initial terms of four years.
    23    (d) After the initial terms of the board members have been  completed,
    24  all board members thereafter shall serve four year terms.
    25    (e)  Each board member shall hold their position until a successor has
    26  been appointed. At the expiration of the term of each board  member  and
    27  of  each  succeeding board member, a new board member shall be appointed
    28  by the party which appointed the outgoing board member.
    29    (f) In the event of a vacancy occurring on the board by death,  resig-
    30  nation  or  otherwise,  a successor shall be appointed within forty-five
    31  days for the remainder of the term by  the  party  which  appointed  the
    32  vacated board member.
    33    2. Members of the board shall select the chair of the board from among
    34  the  members whom do not hold political office.  The chair shall convene
    35  the initial meeting of the board within sixty days after  the  effective
    36  date of this section.
    37    3.  Members  of  the  board shall be citizens of the United States and
    38  residents of the state.
    39    4.  Members of the board that are appointed by the comptroller or  the
    40  trustees  shall not hold elected office at the time of their appointment
    41  to the board or have held elected  office  during  the  preceding  three
    42  years at the time of their appointment to the board.
    43    5. The board shall develop and implement the following:
    44    (a) A business plan for the bank that includes timelines for beginning
    45  new  functions  and processes that transition functions and responsibil-
    46  ities to the bank that were previously performed by other entities;
    47    (b) Initial capitalization requirements of the bank using a portion of
    48  the tax revenue from the sale  of  legal  adult-use  cannabis  products,
    49  pursuant to section two hundred fifty-six of this article;
    50    (c)  A  plan  to  offer  low  or  no cost access to checking accounts,
    51  savings accounts and low-interest loans to low-income individuals;
    52    (d) A plan to engage in community outreach and education necessary  to
    53  encourage low-income individuals to open accounts with the bank;
    54    (e)  A  plan  to  explore and develop means of electronic banking that
    55  comply with the requirements of paragraph  (d)  of  subdivision  one  of
    56  section two hundred fifty-four of this article;

        A. 5978                             6
 
     1    (f)  A  plan to commence bank operations by September first, two thou-
     2  sand twenty-four; and
     3    (g) Procedures that comply with all regulations and guidance issued by
     4  federal and state regulatory bodies regarding the provision of financial
     5  services  to  cannabis-related  businesses, pursuant to paragraph (d) of
     6  subdivision one of section two hundred fifty-four of this article.
     7    6. The board shall make requests to the appropriate committees of  the
     8  legislature  regarding any other items necessary to fulfill its require-
     9  ments pursuant to section two hundred fifty-four of this article.    Any
    10  request  shall include draft legislation for consideration by the legis-
    11  lature.
    12    7. Pursuant to subdivision two of section two  hundred  fifty-four  of
    13  this article, the board shall adopt rules regarding:
    14    (a) Safety and soundness standards of the bank;
    15    (b) Criteria for approving, monitoring and evaluating loans;
    16    (c) Eligibility requirements for borrowing;
    17    (d)  Eligibility  requirements  for individuals who apply for checking
    18  and savings accounts;
    19    (e) Transparency requirements for bank operations including a plan  to
    20  issue  quarterly reports to the comptroller and superintendent beginning
    21  after September first, two thousand twenty-four;
    22    (f) Ethics and conflict of interest requirements  for  the  board  and
    23  officers  and employees of the bank, including rules to ensure that they
    24  perform their functions in compliance with the public officers law; and
    25    (g) Other rules and procedures as needed for efficient  administration
    26  of the bank.
    27    8.  The  board  shall commence bank operations by September first, two
    28  thousand twenty-four.
    29    9. The board shall appoint a bank president with  substantial  experi-
    30  ence  in  banking. The bank president shall serve at the pleasure of the
    31  board, on such terms and conditions as the board determines.
    32    (a) The bank president shall provide support to the board,  carry  out
    33  bank  policies and programs, and exercise additional authority as may be
    34  delegated by the board.
    35    (b) The bank president shall serve a term of five years.
    36    (c) The bank president shall hold office until a  successor  has  been
    37  appointed  and  qualified by the board. At the expiration of the term of
    38  each bank president and of each succeeding bank president,  a  new  bank
    39  president shall be appointed by the board.
    40    (d)  In  the  event  of  a vacancy occurring in the office of the bank
    41  president by death, resignation  or  otherwise,  a  successor  shall  be
    42  appointed  within  forty-five  days for the remainder of the term by the
    43  board.
    44    (e) Subject to available funding and consistent with the rules adopted
    45  by the board, the bank president may:
    46    (i) employ such additional personnel as are  necessary  to  the  oper-
    47  ations  of  the  bank.   Such employment shall be in accordance with the
    48  civil service law; and
    49    (ii) establish  advisory  committees  and  contract  with  public  and
    50  private  sector  experts  who  have  special  technical expertise if the
    51  expertise is necessary to fulfill the requirements of this  section  and
    52  section two hundred fifty-four of this article.
    53    (f)  The bank president shall, at their discretion, have the authority
    54  to hire and terminate the employment of bank employees.
    55    10. The board shall set policy for the bank; provided that neither the
    56  board nor any board member shall be involved in  day  to  day  decisions

        A. 5978                             7
 
     1  regarding  the  functioning  of  the bank. Management decisions shall be
     2  made independently by the bank president. The bank president  may  dele-
     3  gate at their discretion management decisions to bank managers and other
     4  employees.
     5    11.  Board  members  shall serve without salary or other compensation,
     6  but they shall be entitled to reimbursement for the expenses incurred in
     7  discharge of their duties under this article.
     8    12. The trustees of the authority, pursuant to a unanimous vote  which
     9  all  trustees  are  present for, may remove any board member or the bank
    10  president for neglect or violation of  the  provisions  of  section  two
    11  hundred  fifty-four  of this article, or general misconduct in office as
    12  defined by the trustees, after giving such member a copy of the  charges
    13  against  them,  and an opportunity to be heard, in person or by counsel,
    14  in their defense, upon not less than  ten  days'  notice.  If  any  such
    15  member  shall  be  removed, the trustees shall file in the office of the
    16  department of state a complete statement of charges  made  against  such
    17  member,  and  their findings thereon, together with a complete record of
    18  the proceedings.
    19    13. The bank president and the board members shall be exempt from  the
    20  provisions of title seven of article fifteen of the banking law.
    21    14.  Six members of the board shall constitute a quorum for the trans-
    22  action of any business or the exercise of any power or function  of  the
    23  authority.
    24    § 256. Capitalization. The bank shall be capitalized with a portion of
    25  the  tax  revenue  derived  from  the  sale  of legal adult-use cannabis
    26  products, pursuant to section ninety-nine-ii of this chapter,  and  with
    27  deposits from low-income individuals whom open a savings and/or checking
    28  account with the bank.
    29    § 257. Deposit of funds. 1. (a) The bank shall serve as the depository
    30  for  the  portion of the state tax revenue from the sale of legal adult-
    31  use cannabis products that is necessary for the  initial  capitalization
    32  of  the  bank.  In  addition, the bank shall serve as the depository for
    33  deposits from cannabis-related  businesses  and  low-income  individuals
    34  whom open a savings and/or checking account with the bank.
    35    (b)  The  comptroller shall deposit into the bank the tax revenue from
    36  the sale of legal adult-use cannabis products that is required  for  the
    37  initial capitalization of the bank.
    38    2.  All  deposits  in the bank are guaranteed by the state of New York
    39  and shall not be insured through the federal  deposit  insurance  corpo-
    40  ration.
    41    3. All income earned by the bank on tax revenue from the sale of legal
    42  adult-use  cannabis products and other deposits that are deposited in or
    43  invested with the bank shall be credited to and become  a  part  of  the
    44  revenues and income of the bank.
    45    § 258. Investment  requirements and regulations. 1.  Before initiating
    46  operations, the bank president shall present an implementation plan  and
    47  any necessary items to the board, that:
    48    (a)  identifies the cannabis-related businesses that the bank plans to
    49  target initially;
    50    (b) identifies any existing state programs that the bank recommends be
    51  transferred under its umbrella, and the  steps  and  timelines  for  the
    52  transitions;
    53    (c)  describes  additional  financing  products  and services the bank
    54  plans to offer, the target markets, anticipated rates, terms and  condi-
    55  tions; and

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     1    (d)  demonstrates how the bank plans to maximize revenues while accom-
     2  plishing its requirements pursuant to section two hundred fifty-five  of
     3  this article.
     4    2.  Wherever there is in any fund or in cash balances in the bank more
     5  than sufficient to meet the current expenditures properly payable there-
     6  from, the bank president is authorized to:
     7    (a) Provide low-interest capital for the financing  of,  construction,
     8  rehabilitation, and improvement of new and existing operations of eligi-
     9  ble  cannabis-related businesses.  Before providing low-interest capital
    10  to a cannabis-related  business,  the  bank  shall  engage  in  rigorous
    11  customer  due  diligence  to evaluate the risks associated with offering
    12  particular financial products and services  and  whether  the  bank  has
    13  sufficient capacity to manage such risks effectively.
    14    (b) Provide low-income individuals access to low-interest loans pursu-
    15  ant  to  paragraph (c) of subdivision five of section two hundred fifty-
    16  five of this article; and
    17    (c) Offer low or zero cost checking and savings bank accounts to  low-
    18  income  individuals  pursuant  to  paragraph  (d) of subdivision five of
    19  section two hundred fifty-five of this article.
    20    3. When investing available funds, the bank  president  is  prohibited
    21  from:
    22    (a)  Buying, selling and/or accepting deposits of federal funds; issu-
    23  ing letters of credit for public deposits; or  providing  a  safekeeping
    24  service  for the United States treasury securities, federal agency secu-
    25  rities, corporate bonds, tax-free bonds, money  market  investments,  or
    26  mortgage backed securities.
    27    (b)  Investing  in certificates, notes, or bonds of the United States,
    28  or other obligations of the United States or  its  agencies  or  of  any
    29  corporation wholly owned by the government of the United States.
    30    § 259. Financial  regulation.    1.  The  bank  shall maintain capital
    31  adequacy and other  standard  indicators  of  safety  and  soundness  as
    32  mandated by the board and the superintendent.
    33    2.  The  superintendent shall examine the bank in the same manner as a
    34  state-chartered banking institution.  The bank shall pay the superinten-
    35  dent for reasonable costs of examinations.
    36    3. The bank shall undergo independent audits  on  the  same  basis  as
    37  state-charted banks.
    38    § 260. Reporting  requirements.    1.  The bank president shall submit
    39  quarterly reports to the board,  comptroller  and  superintendent  in  a
    40  manner  and  form  prescribed by the board.  Late reports shall be cause
    41  for removal of the president of the bank.
    42    2. The board, in conjunction with the bank president, shall  make  and
    43  submit  a report to the legislature on the affairs of the bank by Decem-
    44  ber first of each year.  Such report shall be made available for  public
    45  viewing  and  analysis  on the website of the office of the comptroller.
    46  The report shall be posted in a conspicuous place  on  the  website  and
    47  shall  be  easy to access and shall be downloadable in several different
    48  formats.
    49    § 261. Ethical requirements.  The bank shall not make a  loan  to  any
    50  board  member,  bank  president, public officer or employee of the bank.
    51  The bank president and employees of the bank shall follow any applicable
    52  ethical requirements in rules, policies and procedures  adopted  by  the
    53  board.
    54    § 262. Fees  and  taxes.    The bank is exempt from the payment of all
    55  fees and taxes levied by the state or any of its subdivisions.

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     1    § 263. Bank records. 1.  Certain bank business records and records  of
     2  the  department  relating  to the bank are exempt from public disclosure
     3  pursuant to article six of the public officers law as authorized by  the
     4  department.
     5    2.  Financial  and  commercial  information  and  records submitted to
     6  either the department or the board for the purpose of administering this
     7  article may be shared between the department and the comptroller.   Such
     8  records may also be used in any suit or administrative hearing involving
     9  any provision of this chapter.
    10    3. The provisions of this section shall not prohibit:
    11    (a) The issuance of general statements based on the reports of persons
    12  subject  to  this article if the statements do not identify the informa-
    13  tion furnished by any person; or
    14    (b) The publication by the superintendent or the board of the name  of
    15  any  person  violating this article and a statement of the manner of the
    16  violation of such person.
    17    § 264. Termination of operations. Upon the determination by the  board
    18  that  the  private banking industry can adequately service the financial
    19  needs of cannabis-related  businesses  and  communities  underserved  by
    20  banking  institutions,  it  shall  develop  and  execute  a plan for the
    21  dissolution of the New York state bank and the New  York  state  banking
    22  authority.  In the event of the dissolution of these entities, the board
    23  shall transfer all outstanding assets and liabilities of the bank to the
    24  comptroller.
    25    § 265. Severability. If any clause, sentence, paragraph,  subdivision,
    26  section  or  part of this article shall be adjudged by a court of compe-
    27  tent jurisdiction to be invalid, such judgment shall not affect,  impair
    28  or invalidate the remainder thereof, but shall be confined in its opera-
    29  tion to the clause, sentence, paragraph, subdivision, section or part of
    30  this article directly involved in the controversy in which such judgment
    31  shall have been rendered.
    32    §  3.  Paragraph  (c)  of  subdivision 3 of section 99-ii of the state
    33  finance law, as added by chapter 92 of the laws of 2021, is  amended  to
    34  read as follows:
    35    (c)  Actual  and  necessary  costs  incurred by the office of cannabis
    36  management [and], the cannabis control board, [and the urban development
    37  corporation,] the New York state banking authority,  and  the  New  York
    38  state  bank related to the administration of incubators and other finan-
    39  cial assistance to qualified [social  and  economic  equity]  applicants
    40  including  the administration, capitalization, and provision of low [and
    41  zero] interest loans to such applicants pursuant to section  [sixteen-ee
    42  of  the urban development corporation act] two hundred fifty-six of this
    43  chapter. Such costs shall be paid out of revenues  received,  including,
    44  but not limited to, from special one-time fees paid by registered organ-
    45  izations pursuant to section sixty-three of the cannabis law.
    46    §  4.  Section  16-ee of section 1 of chapter 174 of the laws of 1968,
    47  constituting the New York state urban development  corporation  act,  is
    48  REPEALED.
    49    §  5.  This  act shall take effect immediately and shall expire and be
    50  deemed repealed upon the dissolution of the New York state bank and  the
    51  New  York  state  banking authority pursuant to section 264 of the state
    52  finance law as added by section two of this act; provided that the state
    53  comptroller shall notify the legislative bill drafting  commission  upon
    54  the  occurrence  of  such  dissolution  in order that the commission may
    55  maintain an accurate and timely effective data base of the official text
    56  of the laws of the state of New York in furtherance of effectuating  the

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     1  provisions  of section 44 of the legislative law and section 70-b of the
     2  public officers law.   Effective immediately,  the  addition,  amendment
     3  and/or repeal of any rule or regulation necessary for the implementation
     4  of  this  act  on  its  effective  date  are  authorized  to be made and
     5  completed on or before such effective date.
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