Fed Stuck In The Middle Of Marijuana Debate

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One of the major issues plaguing the US' newly developing marijuana industry has been banking. Although President Obama has granted states the right to determine their own marijuana laws, the substance is still classed as illegal in the federal government's eyes. For that reason, banks bound by federal law have been unable to engage with marijuana firms even in states where the drug is legal.
Fed Lawsuit
Last week, Colorado's Fourth Corner Credit Union
sued
the Kansas City Fed after its application for federal insurance was rejected. The credit union was denied a routing number in order to set up its master account, meaning that Fourth Corner would be unable to operate. The firm said the Fed's decision to reject Fourth Corner is an unreasonable restraint of trade and commerce and that the credit union's receipt of a state charter should have given it access to federal insurance.
Fed Pushes Back
The Fed has argued that it has the right to use its own discretion when it comes to opening new master accounts. The bank claims it was unable to accurately asses the risks associated with Fourth Corner's business and therefore is allowed to reject the application.
Conflicting Laws
The legal battle underscored the pitfalls of conflicting laws at the federal and state level. While legalization efforts have been successful in many states across the US, the banking issue will likely continue to plague the industry as long as federal law continues to class marijuana as illegal.
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Posted In: NewsTop StoriesFederal ReserveMarketsCannabismarijuana
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