As Colorado legalized marijuana for recreational and medical use, the substance remains illegal at the federal level.
And this is the main hurdle and the Achilles heel for the growing marijuana industry in the state of Colorado. Business opening up shop across the state are dwelling a pond of insecurity. Business is booming, revenues are flowing in, and tax money is duly paid.
However, banks refuse to insure the businesses, to allow mortgages, to open credit lines or accept deposits that could be linked to ‘pot money’.
This reality renders the owners of marijuana businesses hopeless. As the small shops grow, revenues are moved through a complicated system in safe houses, basements or any other place deemed sufficiently fit for a hideout.
The Fourth Corner Credit Union in Denver, Colorado tried to address this issue, thinking the marijuana industry and business owners needs a hand. In November, the Fourth Corner Credit Union applied with the Federal Reserve for a master account.
This is necessary in order for the credit union to communicate with other institutions and be able to extend a helping hand to the hundreds of marijuana businesses, legal under the state law.
Perhaps unsurprisingly, the Federal Reserve denied the request for a master account. The Federal Reserve branch located in Kansas City, informed the Fourth Corner Credit Union of the decision in July.
This Thursday, Mark Mason who decided to open the credit union which is backed by the office of the Colorado governor, announced that two lawsuits have been filed with a Federal Court in Denver.
One of them targets the Federal Reserve and demands that the Fourth Corner Credit Union receives equal access to the financial system, while the other targets the National Credit Union Administration. The latter institution also denied the credit union deposit insurance, citing the uncertainty of the marijuana industry the credit union intends to serve.
According to Mr. Mason, banking services are the bloodline of any business. Denying this to the marijuana businesses across Colorado means endangering employees and establishments which are legally operating under state law.
For employees which carry the money daily from one location to another, the risks are immense. As are for those who receive their salaries in cash and walk through the city streets with large amounts of cash on themselves.
The government of Colorado backs the Fourth Corner Credit Union. According to a recent statement, the lack of access that banks are imposing on the marijuana businesses represents a public safety issue. And it impedes the proper functioning of the state’s tax collection system.
The credit union already received the license to function from the state of Colorado last year. All it needs is the approval of the Federal Reserve bank.
Perhaps, following the lawsuit, the odds will play in favor of Mark Mason, the Fourth Corner Credit Union and the legal marijuana businesses it intends to aid.
Photo Credits: DenverPost