Marijuana Banking Bill Would Boost Deposits By Billions If Enacted, Congressional Budget Office Says On One-Year Anniversary Of Committee Passage

On the one-year anniversary of a Senate committee’s passage of a bipartisan marijuana banking bill, the Congressional Budget Office (CBO) has released an analysis on the economic impact of the reform, including the likely increase in federally insured deposits from cannabis businesses by billions of dollars once banks receive protections for servicing the industry.

The Senate Banking Committee approved the Secure and Fair Enforcement Regulation (SAFER) Banking Act last September, but it’s so far gone without floor action amid competing legislative priorities and ongoing disagreements among members about specific components of the proposal. Stakeholders are hoping that the release of CBO score could help clear the path for floor consideration.

CBO looked at the legislation from multiple angles, assessing potential costs and savings for a variety of federal agencies such as the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), Financial Crimes Enforcement Network (FinCEN) and members of the Federal Financial Institutions Examination Council (FFIEC), including the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA).

CBO said it expects direct spending to be impacted in three key ways if the SAFER Banking Act is enacted. For example, mortgage programs would likely be affected due to an “increased volume in federal housing programs that issue or guarantee home loans,” bank deposits insured by FDIC and NCUA would likely grow and there would be an increase in administrative costs “stemming from additional requirements for agencies whose costs are classified as direct spending.”

All told, “CBO estimates that enacting the bill would increase net direct spending by $63 million over the 2024-2034 period,” the report says.

The office said that, assuming the legislation passes this year, it expects banks to see insured deposits increase by about $1.5 billion, and credit unions will see deposits grow by $125 million, in 2026. That would “rise to $2.9 billion and $475 million, respectively, by 2034.”

While CBO said it anticipates direct spending would increase by $7 million “to resolve potential future bank failures” based on those rising deposits, that would be “more than offset by $16 million collected by the FDIC (in premiums) and NCUA (in capital deposits).”

“CBO thus estimates that enacting S. 2860 would decrease net direct spending by $9 million over the 2024-2034 period for the FDIC and NCUA,” it says.

Additionally, the score says CBO expects that the number of loans that FHA will guarantee to grow annually by 3,600 if the SAFER Banking Act passes, as the bill would add protections clarifying cannabis business workers’ eligibility for housing programs. But it says the costs paid out to mortgage lenders will be offset by revenue from interest on those loans, resulting in a $147 million decrease in spending over the 2024-2029 period.

For VA loan guarantees, the office said it projects those to increase by 950, with an estimated volume of $450 per year from 2024-2034. For government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, it expects the number of loans it offers to grow “by about 350 and increase loan volume by $150 million a year over the same period.”

“On that basis, CBO estimates that enacting S. 2860 would increase direct spending for VA by $56 million and for the GSEs by $13 million over the 2024-2034 period,” it says.

The report also identified several areas of ongoing “uncertainty” as far as the economic impact of the SAFER Banking Act are concerned, including questions about whether guidance that agencies would be required to issue would be “stricter or more lenient than current guidance,” which could impact the willingness of financial institutions to take on marijuana business clients.

“CBO estimates that enacting S. 2860 would not increase net direct spending by more than $2.5 billion in any of the four consecutive 10-year periods beginning in 2035,” it says. “CBO estimates that enacting S. 2860 would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2035.”

CBO also scored an earlier version of the marijuana banking bill after it cleared a House committee in 2019, finding that the federal government ultimately stood to save money if the reform was enacted.

With time running short in the remainder of the session as lawmakers work to keep the government funded amid a contentious presidential election, the prospects of moving the SAFER Banking Act this year remain uncertain, however.

Sen. Jeff Merkley (D-OR), the Democratic Senate sponsor of the legislation, told Marijuana Moment last week that it’s “great” and “helpful” that former President Donald Trump, the 2024 GOP nominee, has come out in support of the reform—though he similarly said the pathway to passage in the chamber is still unclear.

Meanwhile, Sens. Elizabeth Warren (D-MA) and Tommy Tuberville (R-AL) separately challenged the idea that there’s enough GOP support for the SAFER Banking Act to pass on the Senate floor during the lame duck session following the election.

Warren accused certain Republican members of overstating support for the legislation within their caucus, while also taking a hit at Trump for doing “nothing” on cannabis reform during his time in office as he makes a policy pivot ahead of the election by coming out in support of the marijuana banking bill and federal rescheduling.

Sen. John Hickenlooper (D-CO) also recently argued in an interview with Marijuana Moment that the main barrier to getting the marijuana banking bill across the finish line is a lack of sufficient Republican support in the chamber. And he said if Trump is serious about seeing the reform he recently endorsed enacted, he needs to “bring us some Republican senators.”

—
Marijuana Moment is tracking more than 1,500 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
—

Senate Banking Committee Chairman Sherrod Brown (D-OH) also recently reiterated the need to advance the SAFER Banking Act as a public safety imperative, promoting it in a video where he tours an Ohio cannabis business. In a recent interview with Marijuana Moment, he also said that “we don’t have enough Republicans, we don’t think.”

Many would like to see a Senate roll call vote on the bill before the end of this Congress—at the very least so members are forced to go on the record amid conflicting reports about whether it has enough support to reach the steep 60-vote threshold to advance to passage. But if it were to fail, some feel that setback could prove all the more damaging to its long-term prospects of success.

Separately Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus, said in a letter to House Speaker Mike Johnson (R-LA) that the cannabis banking bill is one example of a measure that should be brought to the floor imminently following Trump’s statement, as well as recent reporting about unearthed audio where former President Richard Nixon could be heard conceding that cannabis is “not particularly dangerous.”

“I would suggest moving policies that, instead of further dividing us, makes a difference for the American people, including for our veterans, law enforcement, small businesses, and more,” the congressman, who is retiring at the end of this Congress, said. “It’s never too late to do the right thing.”

Whether Johnson would be willing to take the congressman’s advice remains to be seen, however. Prior to becoming speaker, Johnson consistently opposed cannabis reform, including on incremental issues like cannabis banking and making it easier to conduct scientific research on the plant.

Kamala Harris Says ‘We Need To Legalize’ Marijuana For First Time As Democratic Presidential Nominee