DENVER - A U.S. District Court judge will hear arguments December 28 on whether the U.S. Federal Reserve must provide a “master account” to the Fourth Corner Credit Union, a financial institution planning to serve the state’s burgeoning marijuana industry.
Fourth Corner filed suit against the Federal Reserve on July 30, after the central bank denied its request for access to the electronic payments system.
The credit union wants that access so customers at marijuana-related businesses can make purchases with credit or debit cards.
Without that access, marijuana businesses remain “cash only.”
On Wednesday, the Federal Reserve filed a motion to have the lawsuit thrown out. In its motion, the Federal Reserve said, “Even transporting or transmitting funds known to have been derived from the distribution of marijuana is illegal.”
“That’s hypocritical,” said credit union attorney, Mark Andrew Mason, who noted that the state has already granted a charter to Fourth Corner.
Mason said the “master account” at the Federal Reserve is essentially the credit union’s bank account.
He said it’s unfair that the Federal Reserve would deny Fourth Corner an account when the State of Colorado and the IRS are putting the taxes and fees they garner from marijuana-related businesses into banks that do have access to the electronic payments system. Banks like Wells Fargo.
“This credit union is simply asking for permission to play on the same field as everyone else,” Mason said.
“We have an extremely strong case,” said Deirdra O’Gorman, President and CEO of Fourth Corner.
She noted that the credit union has also sued the National Credit Union Administration over its refusal to provide insurance to Fourth Corner.
Many in the marijuana industry, including those who provide security, risk mitigation and compliance services, like Blue Line Protection Group, are anxiously watching the outcome of both cases.
“Is banking a necessity? Absolutely,” said Ricky Bennett, Blue Line’s Vice President of Operations and Compliance.
Bennett told 7NEWS that robbers and burglars target some dispensaries because of what’s inside.
He showed a 7NEWS crew video of four armed robbers breaking into a dispensary in the Cole neighborhood last April.
“They forced a woman at the front desk to the floor and held a gun to her head,” he said. “After being surprised by an employee in the grow operation, the intruders took off running."
He said one of them fired a couple of shots toward the business from the parking lot.
“We talk about it being a heavily cash-laden industry, but also, sometimes, that product has a very high value, sometimes more value than the cash, particularly if it winds its way out of state,” he said.
Bennett added that providing banking services so customers can use credit or debit cards will help “legitimize” the businesses and reduce the amount of cash on the premises, making it safer for employees, customers and neighbors.
He said that’s important because many dispensaries are in neighborhoods where people live.
According to Mason, the parties requested the judge to decide the case as a matter of law. Judge R. Brooke Jackson set a hearing date for December 28 at 9 a.m. in U.S. District Court.