Federal Judge Scraps Appeal for The Fourth Corner Credit Union

The latest banking battle in the cannabis industry is over – seemingly before it even began.

On Wednesday, a federal judge in Denver threw out a lawsuit on behalf of The Fourth Corner Credit Union, the world’s first planned legal cannabis credit union, saying that an approval of the institution from the federal reserve “would facilitate criminal activity.”

Fourth Corner has been all but begging for federal banking approval since its inception in November 2014, but the struggle came to a head last July when the credit union unsuccessfully sued the federal government after being denied a master account.

This latest blow to the Fourth Corner case proves that the federal government is not yet ready or willing to talk seriously about the cannabis and hemp industries. Meanwhile, private companies are taking charge and forging some of the first relationships between cannabis-related companies and the big banks.

David Dinenberg, CEO of KIND Financial in Los Angeles, specializes in providing financial solutions through technology to cannabis-related companies. In addition, through a partnership with Link to Banking, KIND provides banking solutions to institutions interested in banking the cannabis industry. His company creates financial compliance software to ensure efficient and accurate transaction reporting – meaning that with a little technology and financial know-how, cannabis companies as well as banks, can conduct business just like any other industry.

“Judge Jackson’s comments over the past week showed that he sympathizes with the need for banking services for the growing cannabis industry,” Dinenberg said. “and yet, this is a perfect example of the ambiguity between state and federal laws and I do believe it was the only decision he could’ve come to. In fact, to put a federal judge in this position makes no sense.”

However, Dinenberg takes exception to Judge Jackson’s statements that this “would facilitate criminal activity.”

“Allowing Fourth Corner, or any other financial institution the ability to bank this industry, does NOT create criminal activity, it actually would do the exact opposite.”

As an example, Dinenberg pointed to KIND partner and solution Link to Banking.

“Through our partnership with Link to Banking, we are able to give banks the tools they need to comply with both the Cole memo and FinCEN memo and, in turn, banks can open accounts to compliant businesses in the cannabis industry. Public safety is one of the biggest concerns that states have to deal with, and without a way to get the cash out of the businesses (and into the safety of a financial institution), it remains a huge hurdle. As I meet with different state legislators across the country, this is one of the biggest obstacles in moving more states towards legalization. With the KIND platform of services, we are able to solve this big problem.”

With several more states looking at legalization policies for both medicinal and adult-use recreational cannabis next year, it’s clear that the political and social factors are changing rapidly – the banking issue is the largest hurdle yet to overcome for cannabis entrepreneurs and will likely shape policy in 2016 and beyond.

According to the company’s website, The Fourth Corner Credit Union is a compliance-focused financial institution organized by a team of well-respected financial, legal, governmental, and cannabis industry leaders. Given the professional manner in which the credit union is handling itself, it’s hard to believe that the federal government won’t even lend a single ear to this landmark case that would make a drastic difference in the health of the US economy, though it appears that some private sector solutions are already in play.


What do you think? Does the cannabis space need to push for its own credit union, or should the industry attempt to fall in line with the big banking players as they stand now?

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