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.
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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.