Sorting out the conflict between federal and state laws concerning marijuana and banking is a task that should be taken up by the next Congress. The current situation serves no one, while endangering business owners and employees. It needs to change.
The case of a Colorado credit union, set up expressly to work with the burgeoning marijuana industry, illustrates the problem. The Fourth Corner Credit Union asked a federal court to order the Federal Reserve to accept money from marijuana shops into the nation’s financial system. In response, U.S. District Judge R. Brooke Jackson pointed to the law, saying, “If I were in Congress, I’d vote for you, but I’ve got to do the job of a federal judge here.”
As the judge suggested, it falls to Congress to straighten this out.
Colorado voters approved Amendment 64 in 2012, and with that, legalized recreational marijuana. (Medical marijuana had been legal for more than a decade.) As such, it is now legal in this state to have, use and sell pot. There are some restrictions, mainly limiting it to adults and banning public use, but marijuana is as legal as alcohol or tobacco.
At the federal level, however, marijuana remains illegal. The Obama administration effectively chose to look the other way if states legalized weed, but under federal law, pot is classified as a Schedule 1 narcotic, right along with heroin.
That has several consequences. For one thing, the Obama administration’s decision not to enforce federal law banning marijuana is not binding on any future president. The United States will have a new president on Jan. 20, 2017, and with the law already on the books, he or she can choose to end legal marijuana entirely. New Jersey Gov. Chris Christie, seeking the Republican nomination for president, has said that if elected he would do just that.
The existing federal law has other ramifications as well. Industries with significant federal involvement – health care, for example, or transportation – must adhere to federal law when it comes to marijuana. In those cases, the fact that Colorado legalized pot does not explain away a positive drug test.
The most pressing conflict, however, shows up in banking. And it is there that the uncertain legal status of marijuana poses the greatest danger.
Banks are regulated by the federal government and must abide by federal law, including the one that says marijuana is illegal. In addition, a number of federal rules were enacted specifically to keep drug dealers from moving or laundering drug proceeds. And, in the case of Fourth Corner Credit Union, the Federal Reserve has said that drug money – however legal under state law – is not welcome in the federal financial system.
What that means is that marijuana shops cannot take credit cards or checks, only cash. That makes those businesses tempting targets for exactly the wrong sort and sets up a dangerous situation.
It does not need to be that way. Keeping legal marijuana money out of banks does not deter pot sales or use. It does not limit the marijuana trade. It only inconveniences and endangers people engaged in a licensed business specifically approved by Colorado voters.
There is no reason to continue that situation. Congress should act.
