Marijuana credit union gets OK from Federal Reserve

Colorado Private Lending

marijuana banking colorado hard money

There is big news in the marijuana industry.  “FOURTH CORNER WINS HUGE VICTORY. The Fourth Corner Credit is pleased to announce that the cannabis industry’s credit union has been granted a conditional master account by the Federal Reserve Bank of Kansas City” (source 4th corner)   Is the marijuana banking problem solved? Is this news really as monumental as the industry says?

What does the federal reserve have to do with local banking? One of the last remaining hurdles for marijuana banking was the federal reserve.  Any bank needs to be able to send and receive money and therefore must gain approval from the federal reserve.  A marijuana credit union has been attempting to get approval from the federal reserve.  They were initially ignored and filed a lawsuit to force the federal government to respond to their request.

 

We all know that headlines can be misleading.  When I first read the Denver Post article I was very surprised.  But if you read further, the devil is in the details.  The Federal Reserve gave “conditional” approval to the marijuana credit union.

The conditions that were given were a bit comical.  The federal reserve stated that the marijuana credit union could not service the marijuana industry until federal law is changed that removes marijuana as a controlled substance.  The did allow the credit union to finance ancillary businesses like an accountant.  There is still another problem to overcome, the credit union needs depository insurance and the major insurers: the FDIC, and National Credit Union Share Insurance Fund (NCUSIF) have both said no.   In a nutshell… who cares!  The accountant could bank today with any bank so this conditional permit is worthless.

All I can saw is “wow”.   Brilliance at its finest!  Our government and tax dollars continue to be hard at work!  What is the point of a marijuana credit union that can’t service the marijuana industry.  If that was their objective, they would be like any other bank.

What does this mean?  Unfortunately, nothing changes. There is nothing to get excited about with this ruling. Marijuana banking will continue to be a problem with cash floating around which can lead to nefarious activities that are difficult to track.  Furthermore, the banking situation is likely not going to change anytime soon with the current administration.

 

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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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