The marijuana industry’s hope for a solution to its banking woes suffered a major setback Tuesday when a federal judge dismissed a lawsuit filed by a startup financial institution hoping to serve cannabis companies.
The Fourth Corner Credit Union filed the suit last year after the Federal Reserve Bank of Kansas City denied its request for a master account.
U.S. District Judge R. Brooke Jackson in Denver said in a nine-page ruling that permitting Fourth Corner to operate would be tantamount to facilitating “criminal activity,” the Denver Post reported.
Jackson also dismissed previous guidance from the U.S. Department of Justice on how banks can work with state-legal marijuana businesses. While bank regulators and prosecutors could ignore federal violations if banks complied with state laws, Jackson wrote that a federal court “cannot look the other way,” according to the Post.
Fourth Corner is still awaiting the outcome of another lawsuit in U.S. District Court against the National Credit Union Administration for not issuing share deposit insurance, which is needed to have a master account.
An official with the Financial Crimes Enforcement Network (FinCEN) said last year that just 105 banks and credit unions service companies that sell cannabis, while a Marijuana Business Daily survey found that 60% of marijuana businesses don’t have bank accounts.