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

From there, TFCCU had very little contact with the NCUA regarding its business model, she said. When the NCUA denied the application, it was a final agency decision, meaning TFCCU couldn't file an appeal, so the credit union had no choice but to file a lawsuit, O'Gorman said.

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

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

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

O'Gorman said TFCCU's business model incorporates lending and a diversified portfolio, including working with businesses that have ancillary relationships with the cannabis industry.

TFCCU also filed a separate lawsuit against the Federal Reserve Bank of Kansas City, which pointed to the NCUA denial multiple times in its own denial letter to TFCCU. The Federal Reserve Bank of Kansas City did not respond to CU Times' request for comment.

Andrew Downin, innovation director for the Madison, Wis.-based Filene Research Institute, said companies operating legally under Colorado law face public and personal risks, and credit unions need the ability to step in and help.

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

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

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

O'Gorman said she has received supportive comments privately from fellow credit unions, but wishes more people would take a stand publicly.

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

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

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

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

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