One of the biggest issues facing the cannabis industry right now is money. It is not so much a lack of money, but rather what to do with it. Because marijuana is still federally illegal, most banks will refuse to do business with anything related to the cannabis industry for fear of prosecution.
As a result of the disconnect between state and federal law, states are left to their own devices to figure out how to deal with this problem. Since sales of recreational marijuana began at the start of this year, Colorado has been making moves to help provide basic banking services to the cannabis industry
Most recently, the Colorado Division of Financial Services issued an unconditional charter to The Fourth Corner Credit Union, making it the first credit union created specifically for the cannabis industry. The next step in the process will be obtaining a master account from the Federal Reserve, which should not take much longer now that a charter has been issued.
After a master account is obtained, it is a simple matter of getting insurance from the National Credit Union Administration; and like most bureaucratic endeavors, this could take some time. However, Fourth Corner organizer Mark Mason told The Denver Post that they will still be able to stay open until their insurance status is decided upon.
“A Colorado law of 1981 allows a credit union to open its doors while an application for share-deposit insurance is pending,” said Mason. “Now, the NCUA can come and look to see how it is functioning, and determine if they will issue the insurance, as they’ve issued to all the other 2,512 state-chartered credit unions in the nation.” Although some depositors may be uneasy about putting money in credit union without insurance, it is still a lot safer than stuffing your money into a mattress.
Although Fourth Corner is not operational at the moment, herbal entrepreneurs can expect them to open its doors as early as January 1.
While the threat of federal prosecution looms over The Fourth Corner Credit Union and others like it, this is still a huge step towards legitimizing the cannabis industry. Without access to basic banking services, the cannabis industry is vulnerable to theft and robbery; credit unions like Fourth Corner will help put that to an end.
If the trend of cannabis credit unions continues, you may see a brand new cottage industry pop up around cannabis banking. Until federal law matches state law, there will definitely be a need for it; and after nationwide legalization, credit unions catering to the cannabis industry just might stick around.