Colorado’s legal cannabis industry is practically printing money, but federal interference is making safe, secure banking next to impossible for a rapidly growing industry that desperately needs it.
The state collected roughly $70 million in tax revenue from legal cannabis in the fiscal year ending June 30, 2015. That’s nearly double the $42 million raised from alcohol sales in that same timeframe.
The revenue engine of cannabis legalization is firing on all cylinders, just as advocates promised. But when it comes to putting all that money somewhere for safekeeping, the system breaks down.
Last year, the White House announced a set of guidelines crafted by the Department of Justice and the Department of the Treasury’s Financial Crimes Enforcement Network to “enhance the availability of financial services for and the transparency of marijuana-related business.”
Those guidelines served as the blueprint for the Fourth Corner Credit Union, which is seeking to provide secure banking services to Colorado’s cannabis industry. Their efforts earned them the support of CO Governor John Hickenlooper and other state legislators.
Before long, the aspiring credit union seemed poised to hammer the first nail into the coffin of a shadowy, sometimes dangerous accumulation of multi-million dollar cash-only businesses forced to rely on safes, armored cars and other security measures.
But, in a sharp reversal of the previous federal guidelines, the Federal Reserve privately informed Fourth Corner that its application for a “master account,” which would allow the bank to begin business and interact with other financial institutions, had been rejected.
Fourth Corner responded by suing the Fed for unfettered access to the national banking system.
The Fed has doubled down on its refusal to officially sanction a cannabis-friendly bank in a court filing that asserts doing so would violate federal law.
“The manufacture and distribution of marijuana is prohibited by federal criminal law,” the filing read. “Even transporting or transmitting funds known to have derived from the distribution of marijuana is illegal.”
The Fed’s filing went so far as to compare Fourth Corner’s attempts to a hypothetical scheme to create banking systems to facilitate “trade in endangered species or trade with North Korea.”
It remains to be seen if the 2nd Judicial District Court in Denver will hear the complaint filed by Fourth Corner.
Andrew Freedman, Gov. Hickenlooper’s Director of Marijuana Coordination, expressed frustration with what he sees as the Fed’s obstructionism.
“We tried to do the most with the building blocks of instructions they sent us,” he said. “[We] set up the most rigorous solution. And we still are left with confusion.”
What do you think? Does the cannabis industry deserve safe, secure banking? Tell us in the comments below.