DENVER (CO) – Colorado’s first marijuana dispensary credit union was denied the banking insurance it needs to open for business, bringing plans to institute pot payroll and direct deposits to a halt.
The Fourth Corner Credit Union sued the National Credit Union Administration in Federal Court on Friday. It claims Colorado bank regulators in November approved its application to open a Denver-based, pot-centric credit union.
The Fourth Corner Credit Union would give marijuana businesses a place to make cash deposits, electronic transfers for payroll, and the ability to perform transactions through means other than cash.
Marijuana growers and sellers in Colorado have been paying employees in paper money, hiring security personnel to stand guard during business hours to protect their capital, and delivering tax payments to the Department of Revenue in buckets and wads of cash.
Because many banks do not want to do business with companies that might carry risks of illicit transactions, marijuana dispensaries are still largely without banking power, Fourth Corner says. It claims the marijuana businesses need a bank to solve the “serious public safety problem presented by large amounts of cash on the streets.”
Citing a Sept. 26, 2014 letter from the National Credit Union Administration, Fourth Corner says the NCUA did not want to give it a master account number, to link it to the federal reserve system, because it was concerned about Fourth Corner’s “ability to effectively mitigate safety and soundness concerns,” due to the nature of its business.
Issues such as money laundering, illegal marijuana transactions, and other gray areas in marijuana-related businesses created several risks that the NCUA was not ready to take on.
Fourth Corner says it is simply “not possible for a financial institution to detect and report all potentially illicit transactions that flow through an institution.” It claims that marijuana-centered banking is permitted under state law, as Colorado legalized the sale of medical marijuana in 2000, and of recreational dispensaries in 2013.
Fourth Corner seeks declaratory judgment and Judicial review under the Administrative Procedures Act, 5 U.S.C. §§701 et seq., on 18 causes of action, including due process.
The National Credit Union Administration declined comment, other than to say: “NCUA has received a copy of the complaint; we are reviewing it and we will make an appropriate response.”
Fourth Corner’s attorney Mark Mason could not be reached for comment Friday.
- Tribe Fights Racial Profiling on the Rez
- Watchdog Demands Rules on FBI Media Spying