New Credit Union to Address Money Issues of Legal Pot Biz

By McCarton Ackerman 12/10/14

The Fourth Corner Credit Union hopes to occupy a void that the banking industry has yet to fill.

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Legal marijuana businesses in Colorado are unable to work with banks since the drug is still illegal at the federal level, but a new credit union aimed at the marijuana industry could address this issue.

The Fourth Corner Credit Union will open up shop in Denver by the beginning of 2015. It will not only accept cash deposits from legal marijuana businesses, but also allow them to make electronic transfers for payroll and rent. Colorado’s banking regulators have also said they will follow state laws by approving Fourth Corner. All the union needs now is the Federal Reserve to issue it a master account number.

"I'm a pro state's rights guy, and in Colorado we have legalized," said Chris Myklebust, the Colorado commissioner of financial services. "When I pull a $20 bill out of my pocket, and look at the front, it says it's legal tender for all debts public and private. Legal businesses in a state should be able to use the currency of the nation."

Because most banks won’t work with marijuana businesses because they could be prosecuted for money laundering or engaging in drug trafficking, these shops have no choice but to operate entirely with cash payments. However, because some Colorado marijuana businesses clear as much as $500,000 per month, having that much open money has left them a target for crime and violence. Some shops have been forced to hire security guards as they stockpile their money at home or in private vaults, while also delivering money to the State Department of Revenue in buckets to pay their bills.

"If you can't get your cash into the Federal Reserve system, you end up stockpiling it in your home, in caves, in your business. At some point, the risk becomes worth it for organized crime," said Myklebust. "I've never even held a joint but I really want to see them banked."

Fourth Corner will limit its operations to Colorado for the time being and most transactions will have to be approved by bankers. Although the union has the potential to spread across the country within the next few years, some of that progress could be halted by federal officials who have yet to decide if a marijuana co-op bank can get Federal Reserve access.

"As the State of Colorado, we've worked to push on every door. Now it's up to the federal government," Myklebust said. "It creates a sense of hope because the answer hasn't yet been no. But there's also a sense of frustration because we haven't heard yes."

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McCarton Ackerman is a freelance writer and editor living in Portland, Oregon. He has been a contributor for The Fix since October 2011, writing on a wide range of topics ranging from medical marijuana in Colorado to the world's sexiest drug smugglers. Follow him on Linkedin and Twitter.

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