We recently reported that the Feds are not going to make things easy for the pot industry even in states where it is legal. The U.S. Federal Reserve and the National Credit Union Administration rejected a bid by Fourth Corner Credit Union in Colorado to act as a creditor and banker for the industry, according to multiple reports. But how can they do this when it has been legalized in Colorado and other states?

The simple answer is that it is still against federal law to be in possession of marijuana, which is still classified as an illegal drug. The White House notes on its website that 23 states and Washington D.C. since 1996 have passed laws allowing smoke marijuana to be used for medical reasons, but that federal law still prohibits marijuana use for any reason. It also acknowledged that Alaska, Colorado, Oregon, and Washington state have all passed legalization initiatives, in addition to D.C., although the District may not sell. However, again, state law does not supersede federal law.

OK, so technically it’s federally illegal, but states still legalized it and the feds don’t appear intent on cracking down on pot dispensaries in those states. Why can’t banks line up?

Banks tend to be extremely large institutions with deep ties to the federal government, and therefore anything that even remotely flies in the face of federal law will not sit well with the executives of Bank of America or Wells Fargo or others. This is despite the fact that the U.S. Treasury Department has issued guidelines to help banks deal with money from marijuana-dealing and distributing companies, indicating very clearly that while there are strict rules in place for dealing with them, there is no outright ban. But that’s not good enough for the big banks, as they feel that such regulations are irritating and simply not worth the effort or the potential legal liability, and therefore aren’t interested in the pot industry’s business — the whole reason Colorado banking regulators are trying to seek federal approval for a credit union like Fourth Corner in the first place.

This is a problem for pot businesses, as they can’t use checking accounts or open up lines of credit. Basically, they have to just carry cash around everywhere and come up with creative ways to pay bills, like pay for their electricity bill with money orders.