Credit unions trace their roots to humble beginnings in 19th century Europe. Franz Hermann Schulze-Delitzsch, a lawyer, established the first credit unions in the 1850s in Germany to give those lacking access to financial services the opportunity to borrow from the savings pooled by themselves and their fellow members. Friedrich Wilhelm Raiffeisen transported the financial cooperative concept to rural Germany a decade later. The movement eventually spread to North America, where credit unions established themselves in Canada and the United States. The credit union movement in the United States included pioneers such as Edward Filene, Roy Bergengren, Louise McCarren Herring and Dora Maxwell, all of whom fought hard against big banks and government bureaucracy to bring financial services to those in need.

From the beginning, the credit union mission has been to provide banking to unserved populations, who historically had to seek out risky and expensive loans from hard money lenders or to rely on the generosity of friends and family. It is from this rich history that the founding members of The Fourth Corner Credit Union chose to apply for a credit union charter as the means of providing reliable, compliant and transparent banking services to the legalized cannabis industry and to supporters of this social movement, which is deeply grounded in the spirit of personal liberty.

Like the legalized cannabis industry, credit unions have been shut out of the mainstream banking industry and have had to innovate to find solutions when it seemed as though the system was doing everything in its power to keep them out. A major wall to access for credit unions came tumbling down with the Monetary Control Act of 1980, which states that a Reserve Bank shall provide all depository institutions equal access to the federal payments system on non-discriminatory terms. This statute provided credit unions with the same access to the nationwide payments system that had been afforded to banks via the Federal Reserve System for decades.

Another piece of the wall came tumbling down in 1982 when federal regulation under the Reagan administration allowed credit unions to grow their memberships and expand into multiple states. As the credit union movement’s reach expanded, so did its detractors. In a 1998 U.S. Supreme Court decision, NCUA v. First National Bank & Trust, the Court declared that federal credit unions may not consist of more than one occupational group having a single common bond. However, within five months of that verdict, the wall crumbled again as both houses of Congress, with the endorsement of President Clinton, changed the law and overturned the Supreme Court’s decision with the Credit Union Membership Access Act (H.R. 1151).

Going back even further in the history of the credit union movement, in August 1934, credit union league delegates from all over the United States attended a conference in Estes Park, Colo., which would soon kick-start the national development of credit unions by founding a related trade association, The Credit Union National Extension Bureau, the forerunner of CUNA. This milestone in credit union history took place in the great state of Colorado, which had the foresight and the courage to approve The Fourth Corner Credit Union as the first chartered financial institution designed to serve the financial needs of the legalized cannabis and hemp industries and of the many thousands of consumers who support the social movement underpinning the legalization and regulation of cannabis.

To execute on its charter, TFCCU, like credit unions before us, had to innovate. The credit union has built a way to place the enhanced “know your customer” or customer identification program and due diligence protocols into the center of our business plan. Compliance is at the core of everything we do. TFCCU will take anti-money laundering compliance out from behind the desk and into the field. Big banks have been resistant to this change in compliance and have pointed to this as the primary reason they are not allowing licensed cannabis businesses access to banking. TFCCU’s compliance program mandates our involvement in this rigorous oversight process, to ensure that cannabis is not being sold to minors or criminal gangs, as is required by FinCEN’s guidelines for banking marijuana related businesses. TFCCU embraces these responsibilities and views change not as an obstacle but as an important challenge we look forward to taking on.

Credit unions at their core have traditionally been disruptors, and TFCCU is no different. We, like the rest of the credit union industry, are committed to finding ways to help those who share a common bond. We advocate for those who have been denied access to banking services in the hope that we can help them thrive in the face of obstacles. Therefore, it is imperative that a credit union charter be a primary vehicle to solve the banking problem for the cannabis and hemp industries. The histories of both the credit union and the legalized cannabis movements have undeniable synergies, and most importantly, common ground.

Deirdra A. O’Gorman is president/CEO for The Fourth Corner Credit Union. She can be reached at deirdra.ogorman@t4c.co or 720-261-5359.

Instant Insights /

Credit Unions: The Perfect Charter for Cannabis Banking

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