A Denver credit union seeking court action that would enable it to represent legal cannabis businesses has had its case thrown out by a federal judge.
U.S. District Judge R. Brooke Jackson dismissed the case brought by Fourth Corner Credit Union against the U.S. Federal Reserve Bank of Kansas City, the territory of which includes Colorado.
“The courts cannot use equitable powers to issue an order that would facilitate criminal activity,”
said Jackson in the ruling.
The Fourth Corner Credit Union was established with the express purpose of serving business in the cannabis industry. Although the credit union was granted a charter in Colorado, the Federal Reserve branch had initially denied the credit union’s request for a master account, the account that would enable the credit union to deal with other banks, which triggered the credit union’s court action.
Arguing for Fourth Corner, South Carolina-based attorney Mark Mason argued that the Federal Reserve did not have to authority to regulate an already-running financial institution. The judge, however, wrote that the Federal Reserve was not obligated to allow a master account to an institution that would violate federal law.
The National Cannabis Industry Association, a trade organization dealing specifically with issues relating to cannabis, cited the judge’s ruling as proof that the matter must now be dealt with by Congress.
“There’s no shortcut, there’s no Band-Aid, there’s no work-around to fix this industry-wide,”
said Aaron Smith, the National Cannabis Industry Association’s Executive Director.
One of the largest obstacles facing the legitimization of the cannabis industry in Colorado, today, is the issue of banking. Since marijuana is still federally illegal, and classified as a scheduled I drug in the United States, banks will not do business with even legally operating marijuana dispensaries. Dispensaries have encountered issues with all banking aspects from employee payroll and revenue deposits to ATM and credit card access and more.
By next month, this problem may find a solution in the Fourth Corner Credit Union, an institution that will offer marijuana dispensaries bank access, allowing the ability to make cash deposits as well as electronic transfers. In other words, marijuana dispensaries operating within Colorado regulations may finally be permitted to operate in the same manner as any other legitimate business.
On November 19, Fourth Corner Credit Union was granted a charter in Colorado. The bank will need to secure a master account number from the Federal Reserve before it can move forward. It is, reportedly, likely that the credit union will receive the needed number, giving it access to electronic banking, because the Federal Reserve is required to issue accounts to organizations that have received charters from the state. Once a master account number is received, the final steps before opening doors will be to secure insurance and a space in which to operate.
So far this year, when both recreational and medical totals are combined, over $60 million in marijuana sales, taxes, licenses and fees have been collected in the state of Colorado. Most of that money has been represented in cash, and dispensaries desperately need a safe and reliable institution in which to deposit that cash. Having a reliable bank will also allow for electronic money to be collected more when debit and credit cards are able to process marijuana dispensary purchases.
photo credit: Huffington Post