A Colorado credit union chartered to offer financial services to marijuana-related groups was “conditionally” granted a “master account” by the Federal Reserve last week, essentially opening the door – at least part way – for the credit union to begin operations.
The Federal Reserve Bank of Kansas City told Fourth Corner Credit Union of Denver in a Feb. 2 letter that the bank would “conditionally grant” the credit union the master account (which provides the credit union with a primary nine-digit Routing Transit Number (RTN), among other things). The Fed has previously denied the credit union’s application; the credit union sued, lost in Federal District Court, appealed to the U.S. Court of Appeals, and won a 2-1 decision last summer. That opened the door to the credit union being allowed to re-apply for the master account (action blocked by the lower court) under certain conditions.
Among the conditions: the credit union cannot serve marijuana-touching (plant-touching) businesses – instead, it will be limited to serving advocacy groups, charities and other groups (such as accountants) related to the marijuana industry. Additionally, the credit union must receive deposit/savings insurance, which a spokesman for the credit union called “the biggest hurdle.”
According to Marijuana Business Daily (a trade publication), the credit union intends to apply for NCUA insurance – which has once before rejected the credit union’s application, largely because of the Fed’s rebuff of the master account to the credit union. According to Mark Goldfogel, executive vice president of industry relations at Fourth Corner, the credit union is hoping the Kansas City Fed’s change of heart will make NCUA more amenable to approving NCUSIF insurance for Fourth Corner, stated MBD. The news organization reported that NCUA had no comment.
The publication also pointed out that the Fed’s decision to grant the master account on the conditional basis is the first time a regional Fed bank has granted such a green light.