Credit unions have historically been disruptors, and have madeit their goal to serve the underserved, according to DeirdraO'Gorman, president/CEO of The Fourth Corner Credit Union. It'singrained in their history, and is part of what makes them sounique and valuable, she said.

That's why she was shocked when the NCUA sent her and the TFCCUboard a letter in July explaining that the credit union was beingdenied federal share deposit insurance. That letter was followed byone from the Federal Reserve Bank of Kansas City, which denied thestate chartered credit union a master account.

O'Gorman has a history of helping people in the financialindustry, and she's no stranger to regulation of both banks andcredit unions. She previously served as the market president forthe First National Bank of Colorado, and as the senior vicepresident and regional sales manager for Liberty Savings Bank ofColorado. After that, she worked as vice president of customerrelationship management at Bellco Credit Union, and later became aconsultant for the newly-founded TFCCU, and was named thecooperative's top executive in February.

The credit union worked with the state of Colorado to fullyexplain its business plan and make changes where necessary. It wasa long process that included a lot of dialogue, O'Gorman said. But,she admitted working with the NCUA felt like the exactopposite.

“There wasn't that back and forth … like there was at thestate,” she said. “The state knew our business plan and asked forchanges, and at the federal level, we never had thatopportunity.”

O'Gorman said TFCCU began the process of applying for federalshare insurance in April 2014, but beginning in May of that year,it became evident that the NCUA felt a credit union that served thehemp and cannabis industry would pose a risk to the NCUSIF and,because marijuana is illegal on a federal level – something theNCUA only mentioned to TFCCU for the first time briefly in thedenial letter – that would weigh heavily on the application'sfate.

From there, TFCCU had very little contact with the NCUAregarding its business model, she said. When the NCUA denied theapplication, it was a final agency decision, meaning TFCCU couldn'tfile an appeal, so the credit union had no choice but to file alawsuit, O'Gorman said.

“[The NCUA] didn't understand how we were going to comply withthe BSA,” she said. “[There was a] fundamental misunderstanding ofour business plan. There was a lot of disconnect about how we wereplanning to operate.”

CU Times reached out to the NCUA for comment on thesituation, but the agency declined to respond due to pendinglitigation.O'Gorman said filing a lawsuit was a difficult decision,but TFCCU faced no other course of action. She said she felt thedenial had more to do with her cooperative's unfortunate label as“the pot credit union,” as opposed to a credit union that wants toprotect legal businesses.

“Some people summarily dismiss you and don't think you haveserious people solving this issue,” she said. “It was never theplan to serve just cannabis and hemp [businesses].”

O'Gorman said TFCCU's business model incorporates lending and adiversified portfolio, including working with businesses that haveancillary relationships with the cannabis industry.

TFCCU also filed a separate lawsuit against the Federal ReserveBank of Kansas City, which pointed to the NCUA denial multipletimes in its own denial letter to TFCCU. The Federal Reserve Bankof Kansas City did not respond to CU Times' request forcomment.

Andrew Downin, innovation director for the Madison, Wis.-basedFilene Research Institute, said companies operating legally underColorado law face public and personal risks, and credit unions needthe ability to step in and help.

“Fourth Corner Credit Union recognized a gap in the cannabisindustry's ability to access basic financial services and isforging a new path,” he said. “Innovation – at its core – is risky.It requires us to question the status quo and keep an openmind.”

He said marijuana itself isn't the issue, and shouldn'tdetermine a person's stance on whether credit unions should servelegal marijuana businesses.

“Political and philosophical opinions aside, we have a uniqueopportunity to live up to the legacy of the credit union movement –to continue to find new ways to ensure that all have safe access tobasic financial services,” he said.

O'Gorman said she has received supportive comments privatelyfrom fellow credit unions, but wishes more people would take astand publicly.

“I understand that it's a large regulatory institute that'strying to do the best for the greater good,” she said. “I get whythey might not feel comfortable sending insurance, but what Ididn't get is the lack of dialogue.”

O'Gorman said most people don't understand how heavily regulatedthe cannabis industry is in Colorado, or the fact that Colorado hasbecome a model for other states because of its tight control.

“With that lack of understanding, a lot of people perceive thisas a free for all,” she said. “It's quite the opposite of that.It's a very controlled and regulated industry that needs afinancial institution such as a credit union.”

For now, O'Gorman said TFCCU will have to wait until it is givenits day in court.

“We're doing this as a last resort,” she said. “Believe me, it'snot something you take lightly, suing the NCUA and Federal ReserveBank of Kansas City. Your only way to try and change theconversation is to have a fair and impartial hearing by a federaljudge. We believe we were denied due process and weren't given theability to plead our case in the other forum.”