Marijuana Entrepreneurs Want to Start Financial Institution to Serve Their Industry

A group of marijuana entrepreneurs in Colorado hopes to open the first-ever financial institution designed to serve their industry. They are faced with a stumbling block—they have not been given approval to make deposits in a Federal Reserve account, according to The New York Times.

The entrepreneurs have received a license from Colorado to open the Fourth Corner Credit Union, and have leased a building in Denver.

Marijuana is considered illegal under federal law. Banks have shut down marijuana business accounts because they fear being prosecuted for aiding and abetting illegal drug dealers, the article notes. Marijuana businesses have been forced to deal in cash, making it difficult for them to thrive.

Mark Mason, one of the founders of Fourth Corner, and his partners applied to the Federal Reserve in November for a “master account” that would allow them to deposit funds and transfer them electronically with other banks. While most businesses receive approval in days, Fourth Corner has not received an answer, Mason said. In January, they were told the request was under review.

There are currently 1,200 licensed marijuana businesses in Colorado.

In February, the Obama administration provided banks with federal guidelines for conducting banking transactions with legal marijuana sellers, enabling a legalized marijuana industry to operate in states that approve it.

Don Childears, Chief Executive of the Colorado Bankers Association said the guidelines “were a yellow light at best.” He noted the guidelines are not law, so they do not prevent a federal prosecutor or state attorney general from going after a bank.