Federal Reserve Says it Won’t Allow Cannabis Banking

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The U.S. Federal Reserve said in a court filing this week that it will not accept money made from the sale of cannabis because the plant is still considered an illegal drug under federal law.

The filing also asks a judge to dismiss a lawsuit against the agency brought on by a startup credit union hoping to serve marijuana businesses.

The move is another blow to Colorado’s efforts to create a bank for its burgeoning marijuana sector and other attempts elsewhere to provide financial services to the industry.

The filing is the latest salvo in a battle between the Federal Reserve and the Fourth Corner Credit Union, which is hoping to serve Colorado’s $700 million marijuana industry.

Fourth Corner applied with the Federal Reserve for a master account – which it needs to begin working with marijuana businesses – but that request was denied. The credit union then filed a lawsuit asking a federal judge to overturn the Federal Reserve’s decision.

The Federal Reserve’s stance on banking seems to contradict guidance issued last year by the U.S. Treasury Department, which said its goal is to “enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses.”

The judge overseeing the case has not yet revealed when he will take it up, according to an Associated Press report.