An upstart credit union that hoped to serve the marijuana industry and had state backing has been denied a master account by the U.S. Federal Reserve, which threatens to close another avenue for cannabis businesses seeking a bank account.
The Fourth Corner Credit Union in Colorado was reportedly informed earlier this month that it wasn’t approved for the master account by the Kansas City Fed. On Thursday night, it filed a lawsuit in federal court challenging the decision, saying it wants “equal access” to the financial system, according to the New York Times.
Because of marijuana’s classification as a Schedule I drug, banks are hesitant to do business within the industry. Chartered financial institutions must have a master account at a designated reserve bank to operate.
Fourth Corner’s denial is the latest setback for marijuana companies looking for a bank. Oregon’s MBank in April said it’s closing all of its cannabis accounts due to the high cost of compliance. First Security Bank of Nevada in May said it will no longer take deposits from the sale of cannabis, also because of compliance issues.
Fourth Corner received a charter from the state of Colorado in November. At the time, it said it was waiting on the National Credit Union Administration to sign off on insurance and for the Fed to issue a master account.
It had hoped to be open by Jan. 1. Fourth Corner executive Deirdra O’Gorman told Marijuana Business Daily in April that she’d had discussions with the Fed, which she took it as a positive sign.
Industry leaders and government officials met with KC Fed President Esther George earlier this year to discuss the difficulties of banking, but that meeting bore little fruit.