DENVER—The Federal Reserve Bank of Kansas is asking a federal judge in Denver to dismiss a lawsuit from a credit union chartered to serve the marijuana industry that is asking the court to force the Fed to issue it a master account.
The Fed in its motion replying to The Fourth Corner CU said that the court forcing it to issue the CU a master account would be compelling the Fed to "facilitate criminal activity," and that it does not want to further "an illegal purpose" by giving the credit union a master account.
"Even transporting or transmitting funds known to have been derived from the distribution of marijuana is illegal," the Fed stated in its motion.
As CUToday.info was the first in the credit union community to report, The Fourth Corner filed suit against NCUA and the Federal Reserve after NCUA turned down the CU for NCUSIF deposit insurance and then the Fed followed by denying TFCCU a master account to access the payments system.
Last year, the U.S. Treasury Department issued rules for how banks can accept pot money. However, marijuana remains illegal under federal law. Federal law may preempt state laws when they conflict or obstruct federal law, the Fed’s motion stated.
"The court would not entertain other such attempts—such as if Colorado enacted a scheme to allow trade in endangered species or trade with North Korea in derogation of federal laws, and then chartered a credit union to handle the finances for companies conducting such illegal trade," the motion stated.
TFCCU CEO Deirdra O’Gorman previously stated the suits are a “last resort,” but the hope is the litigation will help to pry open a dialogue between the credit union and the federal agencies. And if not, an end-game is to get another perspective on a CU serving the pot trade.
O’Gorman emphasized that an “impartial” decision on the situation is needed. “Clearly there needs to be more conversation, and hopefully at least an outsider’s perspective—a federal judge—to level the playing field.”
Credit union regulators in Oregon and Washington recently discussed how they have adjusted to serving marijuana businesses despite the federal laws.