POT CREDIT UNION TRIES AGAIN FOR FED BANK ACCESS

Fourth Corner forges on in bid to be state’s first credit union for pot

The Fourth Corner Credit Union on Friday appealed a lower court’s ruling that denied its bid to become the first Colorado credit union for the marijuana industry.

U.S. District Judge R. Brooke Jackson in January dismissed Fourth Corner’s suit seeking a master account with the Federal Reserve Bank of Kansas City. Jackson said granting access to the Federal Reserve’s network would “facilitate criminal activity” because marijuana remains illegal under federal law.

“We don’t believe that the courts can rule on the potential of breaking a law before any crime has been committed,” said Mark Goldfogel, Fourth Corner’s executive vice president of industry relations.

Fourth Corner’s brief was filed in the 10th U.S. Circuit Court of Appeals.

Other banks and financial institutions already are serving the marijuana industry under guidance issued by the Department of the Treasury Financial Crimes Enforcement Network, the credit union noted.

“It’s incredibly hypocritical for the Justice Department and the Financial Crimes Enforcement Network to issue guidelines on how to do something while not allowing those industries who wish to follow those guidelines the ability to do so without the fear of prosecution,” Goldfogel said.

Fourth Corner received a state creditunion charter in November 2014 but was refused a master account by the Federal Reserve.

“We have created a system that allows billions of dollars to flow unsecured in the industry because our government bureaucracy moves slowly,” Goldfogel said. “And that scares me.”

The Federal Reserve’s policy is to not comment on pending litigation, said Scott S. Barker, a Wheeler Trigg O’Donnell attorney representing the U.S. banking system.

The Colorado Bankers Association declined to comment on the specifics of the litigation. “As far as we are concerned, nothing has changed,” spokeswoman Amanda Averch said. “It remains illegal under federal law, and the Controlled Substances Act is very clear.”

As the case against the Federal Reserve progressed, it became apparent that the lower court’s decision would not be the final determination, Goldfogel said.

“We knew that probably this was going to be a somewhat protracted court battle, whether we won or lost the first round,” he said.

But Goldfogel said legal rulings made in the months since the January ruling give the credit union an advantage heading into the second round:

• In February, a Colorado District Court judge ruled partly in favor of Green Earth Wellness, a Colorado Springs marijuana business that was seeking insurance coverage for plants damaged during the Waldo

Canyon fire.

• In March, the U.S. Supreme Court declined to hear Nebraska and Oklahoma’s lawsuit challenging Colorado’s marijuana legalization.

• In April, the 9th U.S. Circuit Court of Appeals threw out the Justice Department’s case that barred the operation of the Marin Alliance for Medical Mari- juana in California.

“That really is, at its core, the same question: Does a cannabis- or marijuana-related business have rights to normal business protections and legal protections?” Goldfogel said, adding that courts previously shied away from ruling in these matters. “And that’s changing literally right in front of us.”