Anyone in a credit union considering offering banking services to marijuana businesses should take the time to make sure that their attorney is paying close attention to litigation between the Federal Reserve Bank of Kansas and the Fourth Corner Credit Union of Colorado. (See Fourth Corner Credit Union v. Federal Reserve Bank of Kansas, U.S. Dist Ct, CO, 15-cv-01644). This case has national implications. It may well clarify the legality of state efforts to legalize pot businesses.

As I explained in a previous blog, Colorado has one of the most liberal marijuana laws in the Country. Its policy makers grew so frustrated with the inability of marijuana businesses to access basic banking services that the state approved a state charter for the Fourth Corner Credit Union. Remember that even though marijuana businesses are still illegal as a matter of federal law, the Justice Department has issued guidance – the Cole Memorandum – detailing the circumstances under which federal prosecutors will forgo enforcement of these laws.

The credit union adopted a detailed BSA policy to conform with the memorandum’s mandates. It also applied for Share Insurance Coverage and a Master Account at the Federal Reserve Bank of Kansas City. The credit union might be able to get private insurance, but without a Master Account it cannot effectively provide banking services.

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