Senate Amendment Would Let Marijuana Industry Workers Qualify For Federal Mortgage Loans

A Democratic senator is seeking to amend a House-passed housing bill with provisions that would allow people who work in the state-legal marijuana industry to qualify for federal mortgage loans.

As the Senate prepares to take up the Housing for the 21st Century Act—which cleared the House last month with rare, overwhelming bipartisan support—Sen. Jeff Merkley (D-OR) submitted an amendment to extend home loan eligibility for those working at licensed cannabis businesses.

Specifically, the proposed amendment stipulates that income derived from state-sanctioned marijuana businesses would be treated no differently than that from other industries for the purposes of obtaining federally backed single-family mortgage loans, with additional protections against forfeiture based on participation in the cannabis market.

Federally backed loans would include any that are “secured by a first or subordinate lien on residential real property, including individual units of condominiums and cooperatives, designed principally for the occupancy of 1 to 4 families” and insured by the National Housing Act, U.S. Department of Veterans Affairs (VA), U.S. Department of Agriculture (USDA) or “purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.”

“Income derived from a State-sanctioned marijuana business that operates within a State, an Indian Tribe, or a political subdivision of a State that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of marijuana pursuant to a law or regulation of the State, Indian Tribe, or political subdivision, as applicable, or a service provider (wherever located), shall be considered in the same manner as any other legal income for purposes of determining eligibility for a federally backed mortgage loan for a 1- to 4-unit property that is the principal residence of the mortgagor.”

The amendment would also secure protections against legal liability for a loan servicer for “providing, insuring, guaranteeing, purchasing, or securitizing a mortgage to an otherwise qualified borrower on the basis of the income” derived from state-legal marijuana businesses.

The law would take effect within 180 days of the underlying bill’s enactment.

Whether the amendment is considered on the floor and adopted by the Senate remains to be seen, but any changes to the housing legislation would send it back to the House for consideration before it potentially heads to the desk of President Donald Trump.

Mortgage loan eligibility provisions were discussed as amendments to a bipartisan marijuana banking bill last session, with language similar to Merkley’s proposal making it into a negotiated version of the Secure and Fair Enforcement Regulation (SAFER) Banking Act in 2023.

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While that legislation has long been considered one of the more practical, incremental reforms that could make it through Congress and onto the president’s desk, the bill hasn’t been refiled for the current session as advocates and stakeholders await action on a pending federal marijuana rescheduling directive.

There are some lawmakers who’ve expressed optimism that the banking legislation could be revived if marijuana is ultimately moved from Scheduled I to Schedule III of the Controlled Substances Act (CSA), though that modest reclassification would not on its own free up all financial services for the sector. It would, however, allow cannabis operators to take federal tax deductions they’ve been barred from under Internal Revenue Services code 280E.