Magazine article American Banker

Federal Judge Urges Settlement of Pot-Banking Case

Magazine article American Banker

Federal Judge Urges Settlement of Pot-Banking Case

Article excerpt

Byline: Lalita Clozel

A federal judge is urging the parties of a closely watched pot-banking case to settle their dispute.

In a court hearing Monday in Denver, U.S. District Judge R. Brooke Jackson recommended that the defendant, the Federal Reserve Bank of Kansas City, and the plaintiff, Fourth Corner Credit Union in Denver, seek a compromise to the complex legal matter, the Los Angeles Times reported.

Fourth Corner, which the state of Colorado granted a charter in November 2014 for the purpose of serving marijuana retailers, applied to the Kansas City Fed for a so-called master account that would give it vital access to U.S. payments system. The application was denied after a nine-month wait, and the credit union then sued the regulator this summer to force it to issue an account. Fourth Corner also sued the National Credit Union Administration, which denied it access to deposit insurance.

Twenty-three states and the District of Columbia have laws legalizing marijuana in some form, including four that allow its recreational use, according to the website Governing. Pot is legal for medical and recreational use in Colorado.

But the U.S. still includes marijuana on its list of illegal drugs, and that is what concerns many financial services executives and some regulators even though federal guidelines were issued in 2014 that permit lenders to serve marijuana businesses if they obey strict rules on oversight and reporting.

The Kansas City Fed opposes letting banks and credit unions serve marijuana-related businesses. …

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