New credit union seeking to serve pot businesses sues after an adverse decision
A credit union created to handle money from Colorado’s pot businesses is suing after a Federal Reserve Bank refused to open a master account that the financial institution needs to operate.
South Carolina litigator Mark Mason sued on Thursday on behalf of the Fourth Corner Credit Union. The defendants in the two federal lawsuits are the Federal Reserve Bank of Kansas City, which turned down the account application, and the National Credit Union Administration, which refused to provide deposit insurance. The New York Times DealBook blog covered the suits.
Mason assembled a team of lawyers and created the Fourth Corner Credit Union in Denver after his son, who lives in Denver, alerted him to a problem: His friends with cannabis businesses were operating legally in the state, but they couldn’t find any banks to handle their funds. Though Colorado has legalized recreational marijuana, it is still illegal under federal law.
The Federal Reserve suit claims the Kansas City bank is refusing to grant the credit union equal access to the Federal Reserve payments system, as it is required to do under federal law. “A request for a master account is processed … , not decided upon,” the suit says. “In providing access to the payment systems, the Federal Reserve does not investigate the financial institution’s customers.”
The suit against the National Credit Union Administration alleges a due process violation and claims the NCUA acted arbitrarily and capriciously.
