The U.S. Federal Reserve has refused to charter a bank for marijuana businesses despite the U.S. Treasury issuing rules to allow banks to accept pot money last year.
The Federal Reserve filed a motion last week asking a federal judge in Denver to dismiss a lawsuit brought by the Fourth Corner Credit Union to try to force the Federal Reserve to charter a bank for legal weed sellers.
The Fourth Corner Credit Union was set up last year to serve Colorado’s $700-million-a-year marijuana industry, the Denver Post reported.
But the bank can’t open without clearance from the Federal Reserve.
“Even transporting or transmitting funds known to have been derived from the distribution of marijuana is illegal,” The Federal Reserve said in its motion, according to the Post.
According to the motion, the government does not intend to accept a penny connected to the sale of pot because the drug remains illegal under federal law.
The Federal Reserve argued in its motion that federal law may even preempt state laws when they conflict of obstruct federal law.
The motion compared condoning such practices to supporting other illegal enterprises.
“The court would not entertain other such attempts — such as if Colorado enacted a scheme to allow trade in endangered species or trade with North Korea in derogation of federal laws, and then chartered a credit union to handle the finances for companies conducting such illegal trade,” the motion says, the Post reported.
Without a charter from the Federal Reserve, marijuana businesses in Colorado are left operating on a cash only basis.
Last year, the U.S. Treasury Department issues rules outlining how banks can accept marijuana money, but the Federal Reserve has said marijuana money cannot go in to the banking system.
• Kellan Howell can be reached at khowell@washingtontimes.com.
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