Federal Reserve has officially rejected a financial institution’s request to serve the medical marijuana industry’s banking needs in Colorado.
The request, that was filed in November by the Fourth Center Credit Union (FCCU), was seeking to create a “master account” that would act as an interactive platform between the state-licensed marijuana businesses and banking institutions. It had received the governor’s backing when it decided to bring expert money laundering officials to build the policies. Having received the state license, the FCCU was only waiting for the Fed’s approval to begin operations in Colorado.
According to the union’s backer, Mr. Mark Mason, they had accurately followed every protocol that could have enabled them to create such a platform. But to him, Feds were never interested to come out of their rigorous compliance — that terms medical marijuana as a Schedule I drug and bars financial institutions from conducting business with its dealers.
“I felt all along like they were trying to figure out a way to deny our application,” Mason told the New York Times. “A federal judge who is only concerned in applying the law can make the decision.”
As a result of the said verdict, the medical marijuana businesses are once again back to conduct their operations in an unsafe environment. Many of them have already equipped themselves with armed guards and cars to protect their cash from being stolen by criminals. The state’s government is also concerned about the public safety under such circumstance, and has further expressed the difficulties tax authorities might face while collecting taxes from the pot industry.
Lawsuit Against Federal Reserve
The FCCU has recently filed lawsuits against the Federal Reserve and the National Credit Union Administration to understand the latter’s authority over them — once for all. The marijuana-supporting firm would definitely be backing its case on the legal status of cannabis industry in Colorado, which somewhat remains illegal on the Federal level. The NCUA’s decision to nullify FCCU is also backed on the same Federal status, for it has questioned the master account’s legal boundaries.
A Parallel Banking System for Marijuana Industry?
At one point or another, legal cannabis industries throughout the US will have to come together to voice their agenda against the conflicting Federal laws. A parallel and decentralized banking system would be an easy answer at that point of time. The industry’s top experts have previously ignored to adopt such systems — read Bitcoin — saying that they still fall in a grey area thanks to their low adoption and limited case studies.
It is about time they start to think back. Developers, on the other hand, can tap on this industry’s needs to create viable — and legal — transaction platforms — with offshore bank accounts, perhaps.