Appeals court sends lifeline to first cannabis credit union

The 10th Circuit Court of Appeals has revived the efforts of Colorado-based The Fourth Corner Credit Union (Fourth Corner) to become the nation’s first cannabis credit union.  The credit union, chartered under an obscure provision in Colorado law that permits the state financial services commissioner to grant a charter so long as the credit union has “applied for” share insurance, was formed in 2014 to serve the state’s legalized marijuana industry and its supporters.  On June 27, in a 2-1 majority opinion, the appellate court overturned the district court’s ruling in the credit union’s lawsuit against the Federal Reserve Bank of Kansas City (Fed Bank) after the bank denied Fourth Corner’s application for a master account. Vacating the district court’s order and remanding with instructions dismiss the amended complaint without prejudice, the divided 10th Circuit panel decision essentially gives Fourth Corner another shot at applying to the Fed Bank for a master account, which could pave the way for the credit union to finally open its doors for business.


In 2012, Colorado, along with Washington, became the first states in the nation to legalize recreational marijuana under state law.  However, under the Controlled Substances Act (CSA), marijuana remains a Schedule I substance, which makes it illegal under federal law to manufacture, distribute, or dispense marijuana.  See, 12 U.S.C. §812(b)(1).  As such, despite legalization under state law, financial transactions involving proceeds from marijuana-related activity can still form the basis for federal criminal prosecution.  As discussed in a prior blog post, this conflict between federal and state law presents a significant challenge to financial institutions in providing banking services to marijuana-related businesses (MRBs).  As a result, MRBs that are operating legally under state law remain largely unbanked and typically operate as cash-only businesses, increasing public safety risks.

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