In Colorado, a local credit union that provides financing for the fledgling marijuana industry is using the Tenth Amendment in its fight against discriminatory practices by the Federal Reserve.
According to George Selgim at the Cato Institute, the Federal Reserve Bank of Kansas City has refused to grant a master account to The Fourth Corner Credit Union (TFCCU). A master account would allow access to the Fed’s payment facilities. The refusal prohibits TFCCU from doing business with marijuana businesses.
In turn, the credit union has sued the Kansas City Fed under the 1980 Depository Institutions Deregulation and Monetary Control Act (DIDMCA). Lawyers for the Kansas City Fed are arguing that the law does not require them to grant any entity a master account.
Selgim writes that “According to TFCCU’s own, less twisted reading of the law, as expressed in its counter motion, Congress never intended to delegate to either the Kansas City Fed or to any other Federal Reserve Bank “unbridled discretion to act as gatekeeper of the nation’s central bank,” and the Kansas City Fed is therefore duty-bound to “respect state sovereignty under the Tenth Amendment by not acting to nullify state charters” (emphasis added).
Mark Mason, TFCCU’s counsel, argued that this appears to be an attempt to a credit union for openly and transparently financing marijuana businesses “while at the same time allowing Reserve Bank services to be used to serve MRB’s–so long as the use is covert, not express.
Recently, TFCCU motioned for a summary judgment on the claims made in its original complaint. According to that motion’s “Statement of Undisputed Facts: (emphasis added).
Colorado is a sovereign state. Colorado issued a credit union charter to TFCCU. TFCCU, by virtue of its charter, is a depository institution. TFCCU requested that FRB-KC issue a master account to TFCCU so it could thereby access essential Federal Reserve Bank (“FRB”) payments services. FRB payments services give a depository institution the ability to effectuate the electronic transfer of funds. FRB-KC refused to provide payments services to TFCCU. TFCCU asserts FRB-KC is mandated by a clear statutory command to provide all depository institutions with access to FRB payment services pursuant to the MCA, 12 U.S.C. §248a. This is a case of statutory construction.
Mason explained to the Cato Institute what’s at stake in this legal battle (emphasis added).
It is an important point that Fourth Corner represents a social movement grounded in state’s rights, liberty and wellness. It’s potential membership extends to supporters of the movement and to the licensed marijuana industry as federal law evolves in that aspect. In the case against FRB-KC the issue is equal access.
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