Pot Credit Union Challenges Feds Decision to Disallow Operations

Fourth Corner Credit Union of Denver filed suit Thursday against the Kansas City branch of the Federal Reserve, which supervises banks in Colorado.

According to the Denver Post, the Fed’s rejection is the latest denial in a string of roadblocks which included the National Credit Union Administration’s denial of Fourth Corner’s application for deposit insurance.

The federal government still prohibits the use of marijuana, even though many states have taken steps to legalize recreational and medical marijuana.

Fourth Corner Credit Union of Denver was created for that goal and approved as a bank by the state previous year.

However, on a federal level it remains illegal, which means banks do not want to be associated with businesses involved in marijuana, that are therefore forced to operate cash only businesses. It was given state approval in November of 2014 and was awaiting the green light from the Fed.

Business owners in the cannabis industry say that they are underserved by banks and need access not only to checking business accounts but also lines of credit for inventory and cash management and expansion.

The industry was counting on the bank, hoping it would be a turning point for all their financial issues.

Indeed, it has led to a whole new industry of security firms catering to dispensaries.

The Federal Reserve rejected Fourth Corner’s application earlier this month.

The Kansas City branch of the Federal Reserve declined comment.

The lawsuit might possibly push the courts into resolving the conflict between laws that are federal and state. Other political and business leaders have expressed that Coloradoans are not getting the full benefits such a growing industry should yield in terms of jobs due to the lack of capital available for loans.