A little over a year ago, the Fourth Corner Credit Union announced its plan to become the first banking institution established purely to serve the cannabis industry. The Federal Reserve Bank of Kansas City denied the application, however, despite significant support from marijuana business owners and even state government officials.
Instead of giving up, the hopeful credit union has filed a lawsuit against the federal banking agency.
The lawsuit is being closely watched by industry advocates everywhere: “This transcript is going to be read around the world and your decision will have an effect around the United States in a major, major way,” Fourth Corner’s attorney Mark Mason told Judge R. Brooke Jackson, who presides over the case.
Andrew Freeman, Colorado’s marijuana policy coordinator, explained the state’s stance:
“Both the governor and I thought it was a pretty good short-term solution to getting cash off the streets and bringing some measure of financial accountability to the marijuana industry…. Secondly, as we talked to banks, a lot of them feel like they are getting yellow blinking lights when it comes to marijuana. The existence of a marijuana credit union would give more faith to other banks and credit unions that they are able to bank marijuana.”
Typically, obtaining a master account is only a formality if the bank already has the state’s approval. Fourth Corner’s association with cannabis, however, appears to have severely handicapped its chances at the federal level. “The Federal Reserve is not the enforcer of drug laws,” argued Mark Mason in court.
Judge Jackson, who is expected to make a ruling soon, gave no indication that he had reached a decision leaning one way or the other. “I think there’s a certain unfairness to allowing these big banks to serve this business and keeping you out,” he admitted. However, “The problem I have… is I would be forcing the Federal Reserve Bank to give a master account to an institution that has stated it will participate in an illegal activity.”
Photo Credit: Ken Lund