The booming marijuana industry in Colorado suffered a setback this month when a federal judge in Denver dismissed a credit union’s lawsuit seeking to access the nation’s financial system.
Fourth Corner Credit Union had challenged a decision by the U.S. Federal Reserve Bank of Kansas City that barred the credit union from taking deposits or issuing credit to marijuana dispensaries or grow facilities.
The credit union was chartered by Colorado in 2014, two years after voters decided to legalize recreational marijuana. In dismissing Fourth Corner’s lawsuit U.S. District Judge R. Brooke Jackson pointed out marijuana is still illegal under federal law.
Jackson added that financial institutions that deal with money made by medical or recreational marijuana businesses could be breaking the law.
So, the ruling leaves two questions.
One, what’s next for Fourth Corner Credit Union? That is still to be determined.
The second question is, how does Jackson’s ruling affect the group behind the effort to license Battle Born Credit Union in Nevada? Randi Thompson, a lobbyist and owner of Randi Thompson Consulting in Reno, told the Las Vegas Business Press the judge’s decision won’t impact their efforts to open a credit union that services marijuana businesses.
“We have taken a different path,” Thompson said. “We have learned from Fourth Corner’s experience and have reached out to the Federal Reserve in San Francisco.”
She said the seven people trying to form the credit union have reached out to state and federal banking regulators to share their business plan. Thompson said the difference between Colorado and Nevada is that Nevada allows credit union to have private insurance.
Fourth Corner had sought and was rejected by the National Credit Union Administration in their attempt to get federal insurance.
“You can’t go to the Fed without insurance,” Thompson said. “The judge had to follow federal law.”
Thompson hopes for a different outcome when Battle Born Credit Union seeks approval from the Federal Reserve in San Francisco. She said the “Fed in Kansas City is a little more conservative than the one in San Francisco.”
“They are open to seeing our application,” Thompson said.
In an interview with the Business Press in August, Thompson said she was hopeful Battle Born would open by the end of 2015. She told the Business Press this month that the process is in a holding pattern while “we deal with our compliance strategy.”
Thompson said it was crucial that Battle Born is able to show federal regulators that they are tracking every dollar that is deposited. She said, “If a marijuana dispensary deposits $100, we need to be able to show them it was a legitimate transaction.”
Thompson also attributed the delay to their only being three dispensaries statewide. However, if voters approve recreational marijuana in Nevada in November, she expected the issue of banking these businesses to pick up momentum.
Access to basic banking services to Nevada’s legal medical marijuana business is one of the most crucial challenges. Dispensary owners find themselves paying their rent, employees, operational costs and taxes in cash.
Wally Murray, chairman of the Nevada Credit Union League and CEO of the Greater Nevada Credit Union in Reno, in a statement to the Business Press said he was hopeful Congress would act to help credit unions.
“The Nevada Credit Union League is dedicated to working with all credit unions and their members to fight for access to the banking services they need,” Murray said. “We hope that, in the light of the Denver federal judge’s ruling, Congress will take action to address the excessive legal and regulatory burdens involved for credit unions and other financial institutions when considering serving legal marijuana-related businesses.
Stumpf reappointed to Fed Advisory Council
The Federal Reserve Bank of San Francisco’s board of directors on Jan. 1 reappointed John G. Stumpf to represent the district on the Federal Advisory Council for a second one-year term. Stumpf is chairman and CEO of Well Fargo & Co.
The Federal Advisory Council consists of one member, generally from the commercial banking industry, from each of the 12 Reserve Bank District. Nevada is a member of the 12th District, which is part of the Federal Reserve Bank in San Francisco.
The council usually meets with the Board of Governors in Washington, D.C., to discuss economic and banking matters.
CO-OP, U.S. Bank: branches matter
We seem to live our lives using our smartphones or tablets to do everything, including our financial transactions. But consumers still prefer visiting brick-and-mortar branches, according to studies from CO-OP Financial Services and U.S. Bank.
“Branches are not going away, but they are changing,” Sarah Canepa Bang, chief strategy officer for CO-OP Shared Branch, said in a statement. “The modern customer wants it all — mobile, online and branches.”
According to the survey, 63 percent of respondents indicated they will never make all of their financial transactions digitally; 80 percent prefer working with an actual banker or teller instead of a virtual one. And, 86 percent plan to do business in actual branches during the next five years.