A judge on Tuesday dismissed a lawsuit that sought federal approval for a credit union aimed at serving Colorado’s marijuana businesses, saying pot is still illegal under federal law.
Fourth Corner Credit Union challenged a decision by the U.S. Federal Reserve Bank of Kansas City to keep the pot bank from accessing the nation’s financial system.
The credit union, which was chartered by Colorado in 2014, is not allowed to take deposits or issue credit – leaving many marijuana businesses operating on a cash-only basis and causing concerns over the possibility of robberies. Colorado voters decided to legalize recreational marijuana in 2012.
Lawyers for the Federal Reserve argued that giving marijuana businesses access to the nation’s banking system is too risky, saying that despite guidance about pot banking from the Department of the Treasury, marijuana money should not be allowed into the nation’s central banking system as long as the drug remains federally outlawed.
U.S. District Judge R. Brooke Jackson dismissed the lawsuit Tuesday because federal law prohibits the drug. He said the U.S. Department of Justice has pointed out that Congress still deems marijuana dangerous, and that financial institutions that deal with money generated by the pot industry could be breaking the law.
Jackson concluded that the marijuana banking situation is untenable, and he hopes it will soon be resolved by Congress. The credit union claimed that although marijuana remains illegal under federal law, the Federal Reserve as a quasi-government institution lacks the authority to keep marijuana banks out of the nation’s financial system.
Mark Mason, an attorney for the credit union, argued in December that a pot bank would serve the government’s interest in keeping better tabs on the drug money.
Aaron Smith, executive director of the National Cannabis Industry Association, said Tuesday that Jackson’s ruling sends the message that Congress must act.
“Forcing cannabis businesses to operate without banking access is a crisis, affecting public safety, law-abiding businesses and the state officials in charge of regulating them.”
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