Top Fed Official Meets with Pot Industry over Banking Impasse

By Wack, Kevin | American Banker, April 13, 2015 | Go to article overview

Top Fed Official Meets with Pot Industry over Banking Impasse


Wack, Kevin, American Banker


Byline: Kevin Wack

A top Federal Reserve official met Thursday with owners of marijuana businesses in Colorado, who catalogued the difficulties of operating in an industry that's largely been locked out of the banking system.

The pot barons' meeting with Esther George, the president of the Federal Reserve Bank of Kansas City, shows that the fledgling industry's lack of access to the financial system is now receiving high-level attention at the central bank, which is facing growing pressure from states like Colorado.

As more states legalize pot, either for medicinal or recreational use, state laws have come into conflict with federal law, which still criminalizes the drug. Banks and credit unions, which sent representatives to Thursday's meeting, are stuck in the middle.

The meeting came as the Kansas City Fed mulls an application that would allow the Fourth Corner Credit Union, a newly established state-chartered institution that plans to focus on the marijuana industry, to open its doors. The central bank's decision could set a precedent with nationwide implications.

During the meeting at the regional Fed bank's Denver branch, George didn't discuss Fourth Corner's pending application. A spokesman for the Kansas City Fed declined to comment on the matter. Officials with Fourth Corner also did not return calls seeking comment.

But George did express sympathy for marijuana merchants who have often been forced to operate in cash, according to Andrew Freedman, Colorado's director of marijuana coordination, who attended Thursday's meeting.

One pot dispensary owner described having been kicked out of 12 different banks, according to attendees. Other businesspeople spoke about the public-safety concerns associated with cash-only enterprises.

"Many small business owners have even had to hire armed guards to escort staffers when it's time to pay taxes because their profits are in cash," Rep. Jared Polis, D-Colo., who helped organize the session, told reporters afterward.

The Kansas City Fed could help address those problems by approving Fourth Corner's application. …

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