Federal Reserve Says No to Credit Union That Wants to Serve Marijuana Industry

A branch of the Federal Reserve has turned down a request by a credit union that wants to serve the growing marijuana industry in Colorado. In response, the credit union filed a lawsuit against the Federal Reserve, demanding “equal access” to the financial system.

The Fourth Corner Credit Union in Denver applied to the Federal Reserve for a “master account” in November, The New York Times reports. The account would have allowed the credit union to interact with other financial institutions and serve state-licensed marijuana businesses in Colorado.

Andrew Freedman, Colorado’s Director of Marijuana Coordination, said he had hoped the credit union would be granted approval. “We thought it was a good solution to the problem,” he said. “Here was a place willing to take on the risk of banking this underbanked group – and that could do rigorous compliance.”

While recreational marijuana is legal in Colorado, most traditional banks will not work with marijuana businesses because the drug remains illegal under federal law, the article notes.

Banks have shut down marijuana business accounts because they fear being prosecuted for aiding and abetting illegal drug dealers. Marijuana businesses have been forced to deal in cash, making it difficult for them to thrive.

In February 2014, the Obama administration provided banks with federal guidelines for conducting banking transactions with legal marijuana sellers.