Colorado’s attempt to create a bank to service its marijuana industry is in a no go position as the federal government has frowned upon its request to establish such an institution.
The Federal Reserve — the guardian of the U.S. banking system — said in a court filing last week that it has no intention of accepting one red cent connected to the sale of pot because the drug remains illegal under federal law.
The new stance amounts to a flip flop on the part of the federal government as in a 2014, the U.S. Treasury Department issued rules for how banks could accept money from the sales of pot.
“We’re frustrated,” said Andrew Freedman, director of marijuana coordination for Colorado Gov. John Hickenlooper, according to a press report.
“We tried to do the most with the building blocks of instructions they sent us, set up the most rigorous solution. And we still are left with confusion.”
The filing came in a legal battle between the Federal Reserve and the would-be Fourth Corner Credit Union, which was set up last year to serve Colorado’s $700 million-a-year marijuana industry.
The credit union can’t open without clearance from the Federal Reserve, which said in its filing that “transporting or transmitting funds known to have derived from the distribution of marijuana is illegal.”
Colorado chartered the Fourth Corner Credit Union after the Treasury Department issued its guidance in 2014 on marijuana banking. Fourth Corner was designed to give the industry in Colorado a safe place to bank while paying steep fees to account for all the hoops set up by the Treasury Department.
However, it needs permission from the Federal Reserve to access the national banking system and perform electronic transactions.
Edited by Jesus Chan
Do you want to add feedback to this story? Please add comment in box below.
Like our Facebook page https://www.facebook.com/TheReadersBureau
Follow us on Twitter https://twitter.com/readersbureau21