A Colorado-based credit union has won conditional approval to launch its business serving marijuana-related ancillary companies, advocacy groups, and charities. After more than three years of fighting in court, the Federal Reserve Bank of Kansas City provided The Fourth Corner Credit Union a letter (dated February 2nd) indicating that it would “conditionally grant” the credit union a “master account.”
This is a milestone in the fight for banking in the cannabis industry, as most banking institutions refuse to do business with marijuana-related companies due to fears of backlash from federal regulators. In addition, this is the first time that any regional Federal Reserve bank has given an institution a go-ahead.
Mark Goldfogel, the executive vice president of industry relations at The Fourth Corner Credit Union, said, “We feel vindicated. We feel like we’ve been heard. We feel like we’ve been able to accomplish an awful lot of education.”
To clarify, The Fourth Corner Credit Union will not be providing services to cannabis business that touch or handle flower, meaning that the accounts will only be available to ancillary companies and others who are providing services to the industry. Beginning in 2014, the credit union wanted to provide services to companies that were plant-touching, such as cultivation facilities and dispensaries, licensed under state law, but was unable to do so.
However, it may still be some time before the credit union is open for business. They are still lacking insurance and the capital required to launch, and have indicated that they will re-apply for insurance through the National Credit Union Administration (NCUA), after being rejected previously. There is currently a lawsuit between The Fourth Corner Credit Union and the NCUA pending, and as such, the NCUA would not comment. Goldfogel hopes that due to the recent decision to green light the master account, the NCUA may be more inclined to provide the necessary insurance coverage to the credit union.
The cannabis industry desperately needs more banking options, and this decision could mean that other institutions will also consider providing banking services to cannabis-connected businesses, although it is clear that mainstream acceptance of cannabis cash is still a long way down the road.