The Federal Reserve has officially rejected the request to establish a "master account" for Colorado's booming marijuana industry. An acceptance would have meant the ability to accept credit and debit cards, electronic transactions, and given "greater access" to our financial system as a whole.
According to The New York Times, the Fourth Corner Credit Union, run by Mark Mason, applied for the master account in November. While the set back is disappointing, it was not altogether unexpected: while recreational marijuana has become legal in several states, it is still federally prohibited. "I felt all along like they were trying to figure out a way to deny our application," Mason told the press.
Colorado's director of marijuana coordination, Andrew Freedman, expressed disappointment in the ruling, as well, especially in light of the Fourth Corner Credit Union and the Colorado's preparedness and willingness to follow federal law. "We thought it was a good solution to the problem. Here was a place willing to take on the risk of banking this underbanked group—and that could do rigorous compliance," Freedman said.
Staying a Cash-Only Industry
Because of the Fed's ruling, the marijuana industry in Colorado will have to stay cash-only. For many small marijuana businesses, that means dealing with safes, armored cars, and other security measures. Not only does it make some of these businesses a target for crime, but an all cash industry also makes it difficult for the state to properly tax and reap the revenue benefits that helped make marijuana legal in the first place.
The Fourth Corner Credit Union, however, is not going down without a fight: they have already filed two lawsuits, one against the Fed and one against the credit union administration. According to Mr. Mason, the Fed acted inappropriately and not according to their own rules when rejecting the Fourth Corner Credit Union application. "We weren't treated fairly. We weren't treated according to procedure," Mason told The Times, adding that the lawsuit will make it so "a federal judge who is only concerned in applying the law can make the [final] decision."
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