DENVER (8/3/15)--A credit union attempting to serve legal marijuana-based businesses in Colorado is suing the Federal Reserve and the National Credit Union Administration. According to The New York Times, Fourth Corner CU applied for share insurance coverage with the NCUA and a master account at the Fed, and both were denied.
An NCUA spokesperson told News Now Friday that the agency has received the complaint and is reviewing it, but cannot comment further on pending litigation.
Fourth Corner applied to the NCUA for share insurance coverage, and was rejected by the agency in early July. According to The New York Times, the NCUA informed Fourth Corner that it was not eligible for insurance, in part because it had not shown how it would “mitigate the risk associated with serving a single industry that does not have an established track record of success and remains illegal at the federal level.”
Fourth Corner applied for a master account, which would allow it to interact with other financial institutions, in November to the Kansas City Fed branch, and it was informed in July the account was not approved. The Fed’s decision followed the NCUA’s decision.
According to The Denver Post, Mark Mason, an attorney representing Fourth Corner, sued the two agencies in order to get “a fair and impartial hearing on its request for a master account.”
Last November, Fourth Corner was granted an unconditional state charter by the Colorado Division of Financial Services. However, share insurance coverage and a Fed master account are needed for the credit union to open for business.
Last July, the NCUA provided its examiners with U.S. Treasury Financial Crimes Enforcement Network guidance for legal marijuana-related businesses.
Issued in February 2014, the guidance notes that Department of Justice attorneys and law enforcement will devote enforcement resources to businesses that are distributing marijuana to minors, criminal enterprises, states where it is not legal, as well as several other scenarios.