When finding places to put your cash becomes a problem, more than likely you’re a success. Such is the case for the cannabis industry in Colorado, which has become so fruitful that the state has enabled coordinators the ability to supply shops and dispensaries with the power to control their finances as businesses in the 21st century do — through digital banking systems. In the near future, Colorado will open a first-of-its-kind credit union specifically designed for entrepreneurs and business owners operating within the legal marijuana industry, nearly a year after the first dispensary in the state began operating.
According to reports, just last month banking regulators in Colorado decided to award The Fourth Corner Credit Union a charter, which is an important step in the ability to operate Fourth Corner as a financial institution. While marijuana is legal in Colorado per state law, it’s still prohibited by federal law. This prohibition makes it difficult for banks to work with marijuana businesses as they can be prosecuted on trafficking and money-laundering charges much like the business operators. This subsequently forces many banks to refuse their services to them.
The charter is a necessary cornerstone in the fight for marijuana dispensaries as it forces the Federal Reserve to provide Fourth Corner with a master account number that will enable the credit union to access the U.S. banking system. With this admission, Fourth Charter will be able to process payments to employees and perform electronic credit and debit transactions to sell product and purchase supplies.
“We consider ourselves regulated, legitimate businesses. We just want to have the same access to banking that other legitimate businesses have,” marijuana dispensary owner Kristi Kelly said. “I don’t want to pay people in cash.”
Developers for Fourth Corner say that the credit union will be like any other bank across the state of Colorado and allow anyone with interest in the marijuana industry, limited or full, to join as a member.
During the summer of 2013, Deputy U.S. Attorney General James Cole established and released the Cole Memo, which laid out eight focal points directed at prosecutors, investigators and law enforcement for the federal imposition of marijuana laws. The memo sites the federal government’s limited resources in its assertion for implementing and maintaining integrity in regards to upholding the principles listed in the memo. Some of them include “preventing the distribution of marijuana to minors, preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels and preventing the diversion of marijuana from states where it is legal under state law in some form to other states.”
The Feds require customary financial institutions to report any transaction that raises suspicion of drug involvement and they are treating Fourth Corner no different. Representatives from the credit union assert that the Cole Memo will not hinder them from attracting members even though its strict limitations force them into prude observation of each transaction. Excited to meet regulation standards, officials have stated that bank operations will be limited to Colorado and it will be mandatory practice for most transactions to be approved by bankers.
Yet, even through these steps and with heavy support from federal prosecutors who helped get the ball for the Fourth Corner Credit Union, it still has a hurdle to climb. All financial institutions operating within the United States must have deposit insurance and due to the lackadaisical effort by the federal organization in charge of approval, it could take two years for the credit union to receive insurance. The delays have prompted organizers to search for private insurance instead, which will be much more costly.
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