Judge dismisses lawsuit seeking federal approval for credit union serving marijuana businesses
A credit union formed to serve Colorado’s legal marijuana industry has lost its bid for approval by the U.S. Federal Reserve Bank, the Associated Press reported Wednesday.
Fourth Corner Credit Union sued the Federal Reserve Bank of Kansas City in July for turning down its application for the master account the credit union needs to operate. It argued that the Federal Reserve lacks the authority to keep marijuana-industry banks out of the financial system. Attorney Mark Mason had argued that regulating Fourth Corner would permit the government to keep better track of marijuana money.
But a federal district judge in Colorado agreed with Federal Reserve lawyers that the credit union should be turned down because marijuana is still illegal under federal law. Dealing with marijuana money could mean breaking the law, the court said.
The judge added that the current banking situation for marijuana businesses is untenable, according to the AP. Marijuana business generally can’t get bank accounts because banks don’t want to work with businesses whose legal status is in doubt. As a result, marijuana businesses tend to be cash-only. This is inconvenient for employees, customers and tax collectors—and it puts them at high risk of robberies. According to a New York Times article from July, Colorado’s state government has said the lack of banking access is a public safety issue.
The judge in the Fourth Corner case said he hopes the issue will be resolved by Congress. A spokesman for the National Cannabis Industry Association agreed.
Forcing cannabis businesses to operate without banking access is a crisis, affecting public safety, law-abiding businesses and the state officials in charge of regulating them,” said Aaron Smith, executive director of the association.