February 16, 2018

Fourth Corner continues push for share insurance to serve marijuana advocates

Fourth Corner Credit Union is asking a federal court to deliver a faster resolution in its case against the NCUA over share insurance coverage now that it has received conditional approval from the Federal Reserve Bank of Kansas City to serve marijuana advocates and groups that support the legalization of marijuana in Colorado.

Fourth Corner sued the NCUA in 2015 for denying it federal share insurance. According to the credit union's motion to compel, filed last week, the NCUA has asked Fourth Corner to voluntarily dismiss the case and reapply for insurance but has not given the credit union any assurances that the agency will timely act on a new application (or approve it) if they reapply. Instead of dropping the suit, Fourth Corner is seeking resolution through mediation. Fourth Corner has asked that the court order mediation to take place within 30 days. The court would stay the proceedings during the dispute resolution process.

The state-chartered credit union was recently granted conditional approval to serve individuals and companies that support the legalized marijuana industry, such as accountants, lawyers and landlords, but not state-licensed dispensaries directly. Fourth Corner has promised it would service marijuana-related businesses only if federal law permits it.

With the Federal Reserve master account in place, they now need federal share insurance (or, alternatively, private insurance) in order to open their doors for business. If the court agrees to Fourth Corner's request, and depending on the outcome of the dispute resolution process, the credit union could open for business soon.

NAFCU has resources available on its Compliance Blog and has explored the issue in its monthly Compliance Monitor newsletter to help credit unions understand the compliance risk of serving marijuana businesses.