Pubdate: Sat, 16 Jan 2016
Source: Denver Post (CO)
Copyright: 2016 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122

CONGRESS MUST ACT ON POT BANKING

In an utterly predictable ruling, a federal judge recently dismissed 
a lawsuit that sought approval for the establishment of a credit 
union for marijuana businesses in Colorado.

Much as we favor such a credit union, why would anyone expect any 
other outcome?

Judges, after all, look at issues through the lens of the law. And 
while marijuana continues to gain footholds as a legal drug on the 
state level, at the federal level it remains an illegal substance. 
What else was the judge to do?

U. S. District Court Judge R. Brooke Jackson expressed sympathy for 
pot businesses struggling under the current system, but in his order 
he said the courts simply could not "look the other way."

Colorado created Fourth Corner Credit Union last year with the 
intention of serving the marijuana industry.

An estimated 40 percent of Colorado marijuana businesses are without 
a bank, which means hundreds of millions of dollars in cash are 
unsecured in Colorado. That is a huge safety issue.

Nevertheless, the U. S. Federal Reserve Bank of Kansas City said it 
could not take deposits or issue credit to the credit union because 
the drug is still federally illegal.

It was a leap to think the Federal Reserve or the courts would ignore 
federal law.

Congress needs to act to fix the banking issue. And that may be a 
long time coming in this Republicancontrolled Congress.

Colorado Rep. Ed Perlmutter's Marijuana Businesses Access to Banking 
Act, introduced in April, is the right move to fix the problem. But 
it was sent to committee, where it has languished.

The bill, which has 33 co-sponsors, seeks to resolve conflicts 
between state and federal laws around pot. Specifically, it would 
provide "safe harbors" and additional civil protections for banks 
working with marijuana businesses. For example, regulators would not 
be able to threaten or limit a bank's deposit insurance, take any 
action or downgrade a loan made to a pot business.

It appears to be a sensible solution. Time will tell. As more states 
legalize marijuana, it is likely that the mood will change on the 
federal level around banking regulations. But that change needs to 
happen in Congress before it will occur in the courts.
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MAP posted-by: Jay Bergstrom