The Trump administration has made no secret that it’s targeting marijuana, and the steps Jeff Sessions has taken could have serious ramifications for the legal marijuana industry. So, the decision by the new Fed Chairman Jerome Powell to greenlight a new credit-union that would cater specifically to Colorado’s marijuana-related businesses is a bit mystifying.
Just after Powell was ushered in to lead the Fed, America’s central bank greenlighted a new master account for Fourth Corner Credit Union. Fourth Corner will work strictly with cannabis-related companies in Colorado.
No Short Road
While cannabis might be legal in Colorado, getting the greenlight to operate was nothing simple. It took 40 months of lobbying by Fourth Corner to finally get approval for a master account. That master account is what allows a credit union to tie in to the Federal Reserve, and it was blocked by a decision handed down by the Federal Reserve Bank of Kansas City. Thankfully, at least for Fourth Corner, that decision was co-opted by a federal judge’s order, which ultimately forced the Fed to allow the credit union to operate. Of course, it was not as cut and dried as that.
Fourth Corner was required to agree to some specific terms. For instance, the credit union cannot deal with any business that actually works with cannabis plants. In addition, Fourth Corner can only work with companies that provide ancillary services to the industry that might not be able to find funding through conventional avenues.
Before they can move forward, Fourth Corner will need to obtain deposit insurance, which was approved by Colorado’s regulators as far back as 2014.
Ultimately, Powell might not have had a direct hand in approving Fourth Corner, but this does mark the first time the Federal Reserve has ever acknowledged banking within the marijuana sector. It’s also a step forward for the industry as a whole, and may encourage growth in other areas within the cannabis industry.