A district judge dismissed a lawsuit filed by a credit union against the U.S. Federal Reserve Bank of Kansas City that sought to provide banking services to the legal marijuana industry. The judge denied Fourth Corner Credit Union access to the country’s financial system saying that cannabis still remained illegal under federal law.
The credit union, authorized by Colorado in 2014, does not have permission to take deposits or issue credit, forcing most marijuana businesses to operate on a cash-only basis, raising robbery concerns. Colorado legalized recreational marijuana in 2012.
The Federal Reserve’s lawyers had reportedly said that allowing marijuana businesses access to the nation's banking system would be too dangerous. They added that despite the Treasury’s regulation on cannabis banking, marijuana money should not be allowed into the nation's banking system as long as pot was illegal under the federal law.
U.S. District Judge R. Brooke Jackson said Tuesday that the U.S. Department of Justice noted Congress' concern over marijuana, adding that financial organizations that deal with money generated by the cannabis industry could be breaking the law, the Associated Press reported. The judge said the marijuana banking situation was shaky, and that he hoped it would soon be resolved by Congress, according to AP.
Aaron Smith, executive director of the National Cannabis Industry Association, said Tuesday that the ruling shows that the Congress must act. "There's no shortcut, there's no Band-Aid, there's no workaround to fix this industry-wide," Smith said, according to AP. "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."
The credit union had said maintained that even though federal law considered weed illegal, the Federal Reserve as a quasi-government institution lacking the authority to keep marijuana banks out of the nation's financial system. Mark Mason, an attorney for the credit union, had said in December 2015 that a cannabis bank would, in fact, keep a better eye on the drug money.