Judge Tosses Fourth Corner Banking Lawsuit

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.

Lending institutions can’t operate without master accounts, which given them access to the country’s banking system.

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.

4 comments on “Judge Tosses Fourth Corner Banking Lawsuit
  1. Lyle Courtsal on

    What is actually criminal is the continued illegal and immoral prohibition against all uses of cannabis both medical and recreational. Nobody has really said that recreational uses can be medically and psychologically classified as beneficial, which it is to many people. Lyle Courtsal
    PS http://www.rxmarijuana.com is Lester Grinspoon’s website where he classifies those specific medical and psych.uses. There should still be a four page A-Z medical index. He came from Princeton and is one of the best, most competent and able medical professionals to come out of the US on this issue. What is actually criminal are the fascists who both force drug people with psycho poison and then ruin those who don’t support some of the dumbest things ever done in human history, like invading Iraq for all that oil when we should have gone wind/solar thirty years ago. Who’s killing the planet with all those stupid war crimes? Not me.

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  2. Rick Fague on

    I have it on good authority that this lawsuit was a bad idea at this point in time because going on the attack simply puts quasi agencies like FDIC and the Federal Reserve on the defensive, where they have no choice but to dig their heels in to maintain the status quo.

    I believe that what the industry should do is push Congress to remove marijuana from DEA drug scheduling completely, just like alcohol. My sources tell me that simply changing it from Schedule 1 to 2 or 3 will not be sufficient to give the All Clear to the banking and financial industries.

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    • Jen on

      Agreed. It all begins with scheduling. The evidence is black and white as to how ridiculous is was in the first place to make it a schedule I drug, as cannabis was used medically for many years prior to the government’s ban. Unless and until this is done, the banking situation will be on hold for the most part.

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  3. JBS on

    That doesn’t really make sense to me. Regardless of scheduling there are many entities, including the state of Colorado and the IRS, that have bank accounts and take the proceeds from cannabis sales and deposit them into accounts with routing numbers. The problem is that the rules are not applied the same to all people and institutions. Cannabis businesses are discrimated against. This would make sense if taxes weren’t collected from these businesses and their employees and if people investing in cannabis businesses were also barred from using bank accounts.

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