A Denver credit union that wants to offer banking services to marijuana businesses has received conditional approval from the Federal Reserve Bank of Kansas City.
The Fourth Corner Credit Union has been trying for years to set up a credit union that would bank marijuana businesses. It will focus on individuals and companies that support legalized marijuana, including those that partner vendors such as accountants and landlords, The Wall Street Journal reports.
But, it won't serve recreational or medical marijuana sellers — something it had set out to do back in 2014, when it received a state charter from the state's banking commissioner.
Fourth Corner Credit Union CEO Deirdra O'Gorman could not be reached today for comment.
O'Gorman has always argued that the Colorado banking commissioner granted the Fourth Corner Credit Union a state charter in November 2014. And the Federal Reserve Bank, which does not regulate or supervise financial institutions such as hers, should have granted the credit union a master account, she maintains. But the Fed denied the application.
Fourth Corner Credit Union sued the U.S. Federal Reserve Bank of Kansas City, whose territory includes Colorado, over its 2015 denial of the credit union’s master account — the account that ties all of its financial dealings to other banks.
In 2016, the suit was dismissed. U.S. District Judge R. Brooke Jackson said at that time that marijuana remains an illegal drug under federal law, despite being legal under state law.
"The courts cannot use equitable powers to issue an order that would facilitate criminal activity," Jackson ruled.
Last July, O'Gorman applied again for the master account. She said then that the credit union would agree not to serve marijuana businesses until it legally could. It was big departure from its original mission, which said it wanted to open as the credit union for marijuana-related businesses, citing an unbanked industry working in a dangerous cash-only environment.
Colorado lawmakers have been trying to change the banking laws around marijuana as long as O'Gorman has been trying to set up her credit union. Numerous bills have gone nowhere over the years.
In January, U.S. Attorney General Jeff Sessions announced that he rescinded the Obama-era Justice Department policy known as the "Cole memo" that paved the way for a hands-off approach to states that have legalized marijuana.
Banks that were already confused or reluctant about how to proceed with marijuana businesses were more baffled by Sessions' move, bankers have said. Colorado Bankers Association President and CEO Don Childears said the move to rescind the Cole memo makes it unclear how U.S. attorneys will proceed with enforcement and prosecution.
"The Colorado Bankers Association continues to assert its long-held belief that an Act of Congress is the only true solution to the state’s legal conflict with federal drug laws," Childears said in January.
Colorado and Washington were the first states to legalize marijuana for recreational use. In 2017, from January to October, marijuana sales in Colorado were $1.2 billion, slightly down from 2016, when sales were $1.3 billion. All told, medical and recreational marijuana sales in Colorado were at $4.2 billion from 2014 to October of 2017.
Through November of 2017, sales of marijuana in Colorado generated $226 million in taxes, licenses and fee revenue. That's up from 2016's total tax collections on marijuana of $193.6 million.In his one page memo released today, Sessions said that federal law prohibits the possession and sale of marijuana.
Original article can be found here.