Even though the average cannabis dispensary in Colorado has a business license for selling marijuana and has followed all of the state’s regulations, the federal government is making it difficult for the industry to do its banking.
Banking regulators with the Federal Reserve have denied the Fourth Corner Credit Union in Denver a “master account.” This would have given the credit union, which aims to deal exclusively with marijuana businesses in the state, the ability to interact with other financial institutions.
Yet without the approval of the Federal Reserve, which operates its nearest branch to Colorado in Kansas City, cannabis businesses are left out of traditional banking.
That, according the New York Times, leaves legal dispensaries with no choice but to deal with cash only and hire several armed security guards. Those without the capital to pay for security may put their employees at risk if the shop gets held up.
Although Fourth Corner Credit Union has been state-chartered since November 2014, Colorado only approved the charter on the basis that Fourth Corner would get federal insurance.
Fourth Corner Credit Union applied for the account and insurance with the Fed back in November, but they were informed in July that they had been denied.
But they haven’t taken the news well. Not only does the credit union have the support of Colorado’s governor, but they’ve also filed a lawsuit in a Denver federal court against the Federal Reserve, asking for “equal access” to the financial system.
The lawsuit also targets the National Credit Union Administration.
Mark Mason, one of the credit union’s founders, wasn’t exactly surprised by the decision.
“I felt all along like they were trying to figure out a way to deny our application,” he told the New York Times.
Meanwhile, other banks in Colorado simply has to refuse to open accounts for cannabis businesses, which pushes them to act as all-cash operations.
The state’s government claims that the lack of access to banks is a matter of public safety, and it also hinders efforts to collect taxes. It also impacts the federal government’s ability to collect taxes — marijuana legalization in all 50 states could bring the federal government $3 billion in taxes annually.