A credit union designed to service the needs of Colorado’s marijuana industry has hit another roadblock on its path to legitimacy. The Federal Reserve again moved to deny the Fourth Corner Credit Union (FCCU) a master account, effectively shutting it out of the financial system.

The move prevents the credit union from moving money electronically and using debit and credit cards, thereby forcing it to rely on an all cash business model. With nearly all banks refusing to open accounts with marijuana businesses in Colorado, and elsewhere, the industry has been forced to improvise with armored cars, safes, and alternatives to traditional banking.

South Carolina lawyer Mark Mason is leading the creation of the FCCU, and was unsurprised with the denial of their application for a master account. Having already received a Colorado state license last year, Mason’s credit union was awaiting approval from the Fed before it could open for business.

Mason has responded by filing a lawsuit against the Fed, which could force a resolution to the issue of conflicting state and federal marijuana regulations. President of the Kansas City Fed, Esther George stated that the Fed had “discretion” regarding master accounts. In a related move, the National Credit Union Administration (NCCA) stated that the FCCU was not eligible for its $250,000 deposit insurance defending its actions by stating that FCCU had not shown how it would, “mitigate the risk associated with serving a single industry that does not have an established track record of success and remains illegal at the federal level.”

A separate lawsuit was filed by Mr. Mason against the NCCA on Thursday night, claiming due process violations. Mason remains most troubled by the Fed decision, for it would still be possible to obtain private deposit insurance without the NCCA.

Citing the Fed’s own rules in his lawsuit, he alleges that the Fed has little discretion in deciding who should be given a master account. Until there is a change in federal policy, customers will have to continue carrying cash.

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