The Treasury Department may have offered banking suggestions for the emerging legal pot industry, but it may all be for naught, since the Fed said no.
Source: www.pymnts.com
Weirdly, the Treasury Department seems less concerned about that part. The Fourth Corner Credit Union (the bank that suffered a denial in Colorado) was designed using rules issued by the Treasury last year for how banks can accept drug money from states where those drugs are legal. Fourth Corner was chartered specifically to service the state’s $700 million a year industry and create a safe place to bank for it.
The credit union now wants a federal judge to step in and order the Federal Reserve to change its mind.
The disconnect between the Fed and Treasury — whose stated goal is to “enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses” — is a little bit peculiar.
But the Fed says it is in a strange position and that while it does not intend to lock anyone up for this, it also simply can’t allow the banking system to house the proceeds of an illegal industry.
The Fed further compared the state asking for approval to a situation where “Colorado enacted a scheme to allow trade in endangered species or trade with North Korea.”
Which means, for the time being, pot is a cash business, even in states where it is a legal and regulated cash business.