Fourth Corner must reapply for share insurance before beginning marijuana banking
The U.S. District Court for the District of Colorado decided recently that Fourth Corner Credit Union must reapply for share insurance coverage in order to serve marijuana advocates and groups since the credit union amended its business plan and field of membership. This renders Fourth Corner's suit against the NCUA as moot.
"[W]hile there may be a controversy over whether defendant can insure a credit union intending to serve marijuana-related businesses, plaintiff is not currently one of those credit unions, and thus, the controversy is not live," the court ruling stated. Fourth Corner sued the NCUA in 2015 for denying it federal share insurance.
Earlier this year, the state-chartered credit union was granted conditional approval from the Federal Reserve Bank of Kansas City 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.
In February, the NCUA urged the court to dismiss the current lawsuit as moot, which it did.
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.
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