A newly-created credit union in Colorado filed a suit against the NCUA and the Federal Reserve Bank of Kansas City – an action that might domino into a state law versus federal law showdown.
In a media release, The Fourth Corner Credit Union said it is the first state chartered credit union designed to provide financial services to the cannabis and hemp industries. TFCCU's motto, according to its website, is “Growing a more perfect union.” That union may not be easy to come by, however, since TFCCU cannot open until it is granted a master account – something it was denied in July.
In the release, TFCCU said it filed the lawsuit last week as a last resort, and that the credit union simply wants a fair and impartial hearing. Currently, marijuana businesses operating in states where the drug is legal in some form, are operating in cash-only environments. Many say that in addition to hurting their ability to apply for business loans, the large amounts of cash in circulation creates a public safety issue.
Ryan Donovan, CUNA's chief advocacy officer, said that although CUNA has no position on the issue of marijuana and whether it should be legal, the trade association does want to ensure credit unions are able to serve their neighbors. He also wants to ensure that any legislation that comes from the federal level in response to financial institutions that cannot assist certain businesses with banking needs is written appropriately.
He said previous attempts were made in Congress to allow financial institutions to handle the banking needs of businesses even if the business itself was illegal, and that there were “a couple definitions of credit union” in the language of those bills.
“We want to make sure they use the proper one,” he said.
Donovan said there hasn't been much appetite in Congress recently to address the issue of federal law blocking credit unions from handling the banking needs of cannabis business in states that have legalized marijuana.
“But I think that as more states move to legalize recreational marijuana, I think the pressure will be on Congress to make sure it is done safely,” Donovan said.
In the meantime, a lawsuit may be the only way for TFCCU to open its doors.
TFCCU applied for a master account in November. In July, TFCCU received a notification from the NCUA that it was not eligible for insurance. Shortly after, the Federal Reserve Bank of Kansas City also denied TFCUU a Master Account. The NCUA told CU Times it cannot comment on pending litigation.
Read more on marijuana business banking issues in the Aug. 12, 2015 print issue of CU Times.
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