Recreational marijuana is legal in Washington, Colorado, and a few other states. But because it is illegal under federal law, most banks refuse to accept deposits from marijuana businesses for fear of federal prosecution. This creates problems for the cannabis industry: too much cash on hand and logistical difficulties paying bills, paying wages, and transferring money. Recently entrepreneurs in Colorado were granted a license to open a credit union–The Fourth Corner Credit Union. They then applied for a “master account” with the Federal Reserve Bank, in which funds could be deposited and from which funds could be transferred. Approval for such applications is usually quick, taking a few days. But the Federal Reserve has taken 3 months for this application, and it still has not made a decision. If the application is approved the cannabis industry in Colorado will have access to banking services. But there are complex legal and policy considerations here, which explains the fed’s 3 month delay.
The same banking issues plague marijuana businesses in Washington, which is why those business owners and their advisors should keep an eye on how the Federal Reserve treats The Four Corner Credit Union’s application.