The Federal Reserve told a federal judge in Colorado to dismiss a lawsuit by Fourth Corner Credit Union, blocking marijuana businesses in the state from legal banking services. This is just one of the many legal conundrums the budding industry has had to face since state law branched away from federal law on marijuana.
The businesses have been relegated to holding and securing large amounts of cash on their own. Some have hired private security firms to help, especially in transporting the money and the marijuana.
In a motion filed today, the Fed maintains that since marijuana is still prohibited under federal law, “transporting or transmitting funds known to have been derived from the distribution of marijuana is illegal.”
This, however, calls the State of Colorado into question, because they tax, license, and set fees on the sale of all marijuana in the state, which amounted to over $13 million in revenue just in August this year. These funds are deposited by the state government at JP Morgan Chase. Apparently the government has no qualms about storing its own cut from marijuana sales at a Federal Reserve member bank.
A quote from a retired Colorado banking commissioner is particularly telling:
“The state treasurer has to put it somewhere. [...] As to where the authority comes from to make it legal, I have no answer to that, honestly.”
If the government can’t even say for sure whether or not it is following its own laws, how can private citizens and firms be expected to follow them?
The double standard reminds me of a great quote from Murray Rothbard’s Anatomy of the State:
“We may test the hypothesis that the State is largely interested in protecting itself rather than its subjects by asking: which category of crimes does the State pursue and punish most intensely — those against private citizens or those against itself?”
Rothbard’s point is clear: the State will certainly pursue and punish crimes against itself to a greater extent than crimes against private citizens, but what about crimes committed by itself versus private citizens? We may test the hypothesis that the State is an unbiased enforcer of its own laws by asking: which category of crimes does the State pursue and punish most intensely — those committed by private citizens or those committed by the State itself?
