Pubdate: Fri, 21 Nov 2014
Source: Denver Post (CO)
Copyright: 2014 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: David Migoya

POT TURNS A HUGE CORNER

Colo. Credit Union Allowed to Run World's First Financial Institution 
to Deal in Green

The world's first financial institution established specifically for 
the marijuana industry could be open in Colorado by Jan. 1.

The Colorado Division of Financial Services late Wednesday issued 
Fourth Corner Credit Union an unconditional charter to operate, the 
first state credit-union charter issued in nearly a decade.

The next hurdles will be obtaining insurance from the National Credit 
Union Administration, the federal regulator of credit unions, and 
getting a master account from the Federal Reserve System.

Gov. John Hickenlooper's office called the charter "the end of the 
line" for the state's efforts to solve the marijuana industry's 
nagging problem: obtaining banking services.

Although the NCUA insurance is not guaranteed-sale and consumption of 
marijuana remain illegal under federal law - Fourth Corner can 
operate until NCUA makes its decision.

"A Colorado law of 1981 allows a credit union to open its doors while 
an application for share-deposit insurance is pending," said attorney 
Mark Mason, one of Fourth Corner's key organizers.

The NCUA review could take up to two years, Mason said.

"Now, the NCUA can come and look to see how it is functioning, and 
determine if they will issue the insurance, as they've issued to all 
the other 2,512 state-chartered credit unions in the nation," Mason said.

Fourth Corner received a bank routing transit number from the 
American Bankers Association in July, after the state gave its 
charter conditional approval. With the final charter issued, the 
master account should soon follow.

Federal regulators are sure to key in on the credit union's business 
plan, insurance and a fidelity bond, aswell as its focus on safety 
and soundness, Mason said.

"The cornerstone is the compliance department, with a world-renowned 
anti-money-laundering expert and former regulators helping to write 
the first manual of its kind in how to handle marijuana money," Mason 
said. "That was critical."

A spokesman for NCUA in Washington, D.C., could not be reached for 
comment late Thursday. Applications for insurance are typically confidential.

Fourth Corner will be open to any legal marijuana enterprise in 
Colorado, as well as anyone who is a member of a nonprofit that 
supports legalized cannabis, according to attorney Douglas Friednash, 
who incorporated the credit union shortly after the charter was approved.

"We are building a whole new structure to deal with an industry that 
still violates federal law," Friednash said in describing the 
difficulty of creating the credit union. "Federal law enforcement and 
bank regulators can punish the industry, and until that gets 
resolved, this industry will continue to have a cloud over it."

But Fourth Corner is a step toward clearing that issue.

"In every other way, the industry has been a normal business, 
operating in every way other businesses do, but primarily in cash," 
said Denver City Councilman Chris Nevitt, one of Fourth Corner's nine 
founding board members. "The one missing piece in making it 
completely normal was banking, the one thing that wasn't there. Now 
it will be."

Nevitt described the board members as "a high powered crew from 
different walks of life." They include:

Paige Figi, a Colorado Springs advocate for the medical uses of 
marijuana oil for children with epilepsy

John Bitzer, managing broker and owner of Bitzer Real Estate Partners 
in Denver;

Brian Gliba, a disabled veteran with the nonprofit Project Wounded Ego;

Joshua Hanfling, coowner of public affairs consultancy Sewald 
Hanfling in Denver;

Heather Jackson, executive director of Realm of Caring in Colorado 
Springs, a nonprofit that caters to patients with debilitating 
conditions such as epilepsy and cancer;

Kristi Lee Kelly, cofounder and chief operating officer of Good Meds 
Network in Denver, a medical marijuana business.

The two remaining board members have not been identified.

Should NCUA deny the deposit insurance coverage, the credit union can 
liquidate, merge with another credit union or press for a state law 
that would allow a credit union to operate under private insurance.

The charter is separate from a legislative move in May that allowed 
for the creation of a marijuana cooperative, a financial institution 
similar to a credit union but one that would operate under 
as-yet-devised rules that required federal regulator approval.

"We wanted to keep all options open," said Andrew Freedman, 
Hickenlooper's director of marijuana coordination. "This is the end 
of the line from the state's side. We've done all we can do."

Fourth Corner organizers filed their application in April, plowing 
through the months of rules and documents required by Colorado 
Financial Services Commissioner Chris Myklebust.

"Yesterday, I issued a charter for a pot credit union," Myklebust 
said Thursday. "That is a huge deal for Colorado and for these 
legitimate businesses."

A location for the bank has been chosen, but organizers would not 
reveal it until real estate matters were finalized.

They also would not say publicly how many prospective depositors they 
expected to have - although they had to disclose the number in order 
to obtain the state charter - but described interest in the project 
as "very, very high."
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MAP posted-by: Jay Bergstrom