Why there are still no joint accounts at Denver’s pot-friendly credit union

Marijuana is legal in Colorado but still illegal under federal law. Above, a cannabis job fair in Denver in 2014.

Marijuana is legal in Colorado but still illegal under federal law. Above, a cannabis job fair in Denver in 2014.

(Doug Pensinger / Getty Images)

Saying he could not look the other way in the face of criminal behavior, a federal judge has dismissed a lawsuit by a local credit union seeking approval to become what would be the first financial institution to openly serve the cannabis industry.

In his nine-page order, U.S. District Judge R. Brooke Jackson rejected the lawsuit filed by Fourth Corner Credit Union against the Federal Reserve Bank of Kansas City, which oversees Denver, for refusing it a master account that would enable it to do business.

Fourth Corner wants to be the first financial institution in the nation to legally work with the cannabis business. But it’s facing serious hurdles because pot, legal in Colorado, remains illegal in the eyes of the federal government, which regulates banking. As a result, few banks are willing to openly do business with the industry for fear of being prosecuted.

During a hearing last week, Jackson expressed sympathy for Fourth Corner’s predicament but telegraphed his position early on by saying marijuana remains a controlled substance and his oath is to uphold the law.


Jackson harked back to that stance in his ruling Tuesday, saying the court cannot use its powers “to issue an order that would facilitate criminal activity.”

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Fourth Corner Chief Executive Deirdre O’Gorman said the credit union board was deciding whether to appeal.

The ruling is a setback for the state and national cannabis industry, eager to move away from a multibillion-dollar economy conducted almost entirely in cash. Many elected officials — including Colorado Gov. John Hickenlooper, who opposed pot legalization — believe the lack of banking options is now a public safety issue.

Dozens of grow houses and dispensaries have been robbed at gunpoint. Some hire heavily armed security to shuttle cash around in armored vehicles. Others stash it in boxes, paper bags and safe houses. A few banks work with the industry but do so quietly and risk prosecution.

“This ruling sends a message loud and clear: Congress must act,” said Aaron Smith, executive director of the National Cannabis Industry Assn. “There’s no shortcut, there’s no Band-Aid, there’s no workaround to fix this.”

He called the inability for his industry to bank a crisis affecting public safety and law-abiding businesses.

There is bipartisan legislation pending in Congress to make banking with marijuana businesses less onerous.


Fourth Corner received a charter from Colorado last year and had hoped to get a master account from the Federal Reserve enabling it to offer checking and electronic banking services.

But the Fed denied the request, saying working with marijuana businesses would be illegal. Yet its lawyers acknowledged in court that they couldn’t recall refusing a master account to anyone else and that other banks that work with the pot industry have such accounts. Ultimately, they deemed the move “too risky.”

The Fed declined to comment on the ruling.

Judge Jackson expressed his own frustration with the murkiness of current law.


In his decision, he cited a 2014 Justice Department memorandum that said banks and credit unions conducting transactions with money from the pot industry face criminal liability under money laundering statutes. But the memo also said prosecutors might refrain from targeting them if the financial institutions ensured their marijuana clients complied with certain guidelines.

Jackson said the memo was not a green light for banks to work with marijuana businesses. It may allow federal prosecutors leeway in whom to target, he said, but it doesn’t change the law.

David Kelly is a special correspondent.