Pubdate: Fri, 23 Oct 2015
Source: Denver Post (CO)
Copyright: 2015 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: Kirk Mitchell
Page: 11A

POT BANKING WOES

Federal Bank Refuses to Issue Master Account to Fourth Corner Credit Union

The U.S. Federal Reserve has asked a federal judge in Denver to 
dismiss a lawsuit by a credit union asking a judge to force its hand 
and charter a bank for marijuana businesses, saying that would be "criminal."

"Even transporting or transmitting funds known to have been derived 
from the distribution of marijuana is illegal," said a motion filed 
Wednesday by the Federal Reserve in U.S. District Court in Denver.

The motion came in a lawsuit filed by Fourth Corner Credit Union, 
which was set up last year to serve Colorado's $700-million-a-year 
marijuana industry. It can't open without clearance from the Federal Reserve.

The government's motion says it does not intend to accept a penny 
connected to the sale of pot because the drug remains illegal under 
federal law.

Federal law may even preempt state laws when they conflict or 
obstruct federal law, the motion says.

Condoning Colorado's illegal marijuana trade would be akin to 
supporting other illegal enterprises, the document says.

"The court would not entertain other such attempts - such as if 
Colorado enacted a scheme to allow trade in endangered species or 
trade with North Korea in derogation of federal laws, and then 
chartered a credit union to handle the finances for companies 
conducting such illegal trade," the motion says.

Marijuana businesses are caught between pursuing a business that 
Colorado declared legal but which violates federal laws, which the 
U.S. Federal Reserve must uphold.

"Simply put, a court of equity will not permit its process to be 
perverted to any illegal purpose," the lawsuit says.

Last year, the U.S. Treasury Department issued rules for how banks 
can accept pot money. But the Federal Reserve now says marijuana 
proceeds can't go into the banking system.

The Associated Press contributed to this report.

This story was first published on DenverPost.com
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MAP posted-by: Jay Bergstrom