Colorado Issues Charter to Marijuana Credit Union
November 24, 2014 – On Wednesday, the Colorado Division of Financial Services (Division) issued a credit union charter to The Fourth Corner Credit Union. The Fourth Corner’s field of membership will include any legal marijuana enterprise as well as any members of non-profits that support the legalized cannabis movement. The credit union’s Facebook page linked to several news stories about the charter issuance.
The credit union has applied to NCUA for federal share insurance, a process that can take over a year before a decision is made. However, under Colorado law, a newly chartered credit union may operate while its application for share insurance is pending. Federal share insurance is currently the only primary share insurance allowed in Colorado under state regulation.
According to Governing, twenty-three states and the District of Columbia have legalized marijuana in some form, with four of those states legalizing recreational use (Colorado and Washington State currently and Alaska and Oregon beginning in 2015). In an August speech, FinCEN Director Jennifer Shasky Calvery stated that a review of Suspicious Activity Reports (SARs) indicated that 105 banks and credit unions were involved in “banking relationships” with marijuana businesses. However, Fourth Corner is the first financial institution organized specifically to serve marijuana businesses.
While federal bank regulators have been slow to provide guidance to financial institutions caught between state legalization and federal laws that still classify marijuana as a Schedule I illegal drug, the U.S. Justice Department and FinCEN have issued guidelines that some banks and credit unions are using as a roadmap to provide financial services to the otherwise unbanked industry.
Colorado Division of Financial Services Commissioner Chris Myklebust, in discussing the issuance of the charter, noted that status quo of many state licensed marijuana businesses frozen out of the financial services sector was untenable. With respect to supervisory oversight, Commissioner Myklebust noted that the Division had been enhancing its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) supervisory program.