Last month, U.S. District Judge R. Brooke Jackson dismissed a lawsuit seeking federal approval for the first credit union for marijuana in Colorado, saying that allowing it “would facilitate criminal activity.”
It’s time The Fourth Corner Credit Union (TFCCU) publicly responds to Judge Jackson’s ruling in favor of the Federal Reserve Bank of Kansas City.
TFCCU’s request was for equal access to the payment system — a master account — which any other financial institution enjoys. It was never TFCCU’s intent to deal with marijuana-related businesses exclusively. Our charter includes appropriate (legal) marijuana businesses as well as ancillary businesses and individuals that have a common interest in hemp and cannabis.
Marijuana banking issues
Integral to TFCCU’s argument is the fact that a financial institution can be state or federally chartered. The Federal Reserve Bank’s directive from the Monetary Control Act of 1980 demands that it provide non-discriminatory access to the payment system. It cannot deny access to an institution where a state has chartered a financial institution to conduct business within that state.
Judge Jackson’s ruling held that the Federal Reserve Bank’s mandate to provide access to the nation’s payment system did not include financial institutions directly serving the cannabis industry because cannabis remains federally illegal. The judge did not address the question of whether the Federal Reserve Bank has supremacy over the State of Colorado in choosing financial institutions. Neither did the judge invalidate TFCCU’s charter, the first of its kind issued by the state of Colorado in over a decade. Rather, the judge ruled that he could not compel the Reserve Bank to grant the TFCCU a master account.
Judge Jackson said that he must take his guidance from Congress, and that the directives issued by the Financial Crimes Enforcement Network and the Justice Department on Feb. 14, 2014, and before do not provide enough clarity. He called these memos a “nothing burger.” That same guidance is relied upon by many financial institutions across the country that work with the industry.
This may be a “nothing burger” to the judge, but it’s currently guiding a multibillion-dollar industry.
Nobody actually wants this industry to remain unbanked. Most thoughtful people recognize the safety challenge the government has created by forcing the marijuana industry to deal primarily in cash. But leadership is needed to solve this problem before lives are lost.
Mark Goldfogel is executive vice president of industry relations for The Fourth Corner Credit Union.