The Fourth Corner Credit Union asked a Colorado federal judgelast month to force the Federal Reserve Bank of Kansas City toissue a master account that would enable the Denver-based statechartered credit union to serve social groups that supportlegalizing marijuana.

The credit union's civil complaint filed Sept. 29 in U.S.District Court in Denver argues federal law “unambiguously createsa non-discretionary statutory obligation” that requires FRB-KCissue a master account to all depository institutions. The lawsuit alleged that FRB-KC has “invoked anillegal discriminatory procedure” by requesting informationfrom the credit union that the FRB-KC is not entitled to receivefrom any depository institution that applies for a master account.The credit union is asking a federal judge in Denver to render adeclaratory judgment and grant a mandatory injunction that wouldorder the federal reserve bank to immediately issue the masteraccount.

TFCCU initially applied for a master account with FRB-KC inNovember 2014 after it received a state charter to serve thelegalized recreational marijuana industry in Colorado. However, thecredit union has since changed its business plan to serve socialgroups supporting the legalization of marijuana. The credit unionalso said it would not serve marijuana-related businesses in thestate until there is a change in federal law that would authorizefinancial institutions to serve the pot industry.

In July 2015, FRB-KC denied TFCCU's request for a masteraccount, claiming it had unfettered discretion to determine whichdepository institutions received master accounts. The credit union sued the federal reserve bank,but its lawsuit was dismissed in January 2016. U.S. District JudgeR. Brooke Jackson in Denver said that while the credit union wasunambiguously entitled to a master account, he ruled the creditunion might use the master account in the future to serveColorado's state-licensed marijuana related businesses, which wouldviolate federal law.

However, last June the U.S. Court of Appeals for the TenthCircuit in Denver voided the district's court ruling, which allowedthe credit union to renew its application for a master account.

In August, however, TFCCU President/CEO Deirdra O'Gormanreceived a letter from FRB-KC that the credit union's uniquenature, structure and history of its business raised legal andpolicy issues related to the master account request. The letterrequested additional information from the credit union.

“All of the said requests deviated from the existing standardprocedure to obtain a master account,” the credit union's lawsuitargued. “FRB-KC continues to maintain its incorrect legal positionthat it has discretion to determine which depository institutionsare entitled to a master account, notwithstanding the law of thecase that properly rejected this argument.”

On Sept. 12, TFCCU requested that FRB-KC issue a master account.The credit union also submitted to FRB-KC a resolution approved bythe board of directors that stated the credit union “shallnot serve marijuana-related businesses until there is a changein federal law that authorized financial institutions to servemarijuana-related businesses.”

Nevertheless, on Sept. 27, the credit union received a letterfrom Tara L. Humston, vice president of FRB-KC, which stated thefederal reserve bank has not denied the credit union's request fora master account though it is committed to working with TFCCU toadjudicate the request.

“FRB-KC has no discretion to adjudicate TFCCU's request,” thecredit union said in its lawsuit. “TFCCU's entitlement to a masteraccount was adjudicated by the district court and the10^th Circuit Court of Appeals both of which determinedTFCCU was unambiguously entitled to a master account.”

When contacted on Thursday, FRB-KC declined to comment on thecredit union's lawsuit.