Balancing Risks: The Mortgage Market's Response to Cannabis Industry Employment

A potential legal watershed formed in May 2024, as the Drug Enforcement Administration (DEA) proposed rescheduling cannabis. However, these efforts will likely prove insufficient to address the current and ongoing exclusion of those in the cannabis industry from accessing mortgage lending or participating in government-backed home loan programs (GHLPs), without which those in the industry are effectively denied the opportunity of homeownership. To promote the full inclusion of the cannabis industry in mortgage lending while preserving financial stability, a balancing adjustment must be made to the current mortgage regulation calculus. While cannabis and access to mortgage lending have each been the subject of significant scholarship, this is the first to consider the interaction of these two areas in depth.

Where existing research on exclusions to credit access focuses on wealth or racial categorizations, this Article provides a new example of how credit exclusion can be industry-based. This Article further contributes to a continuing discussion of the efficacy of the ability-to-repay (ATR) requirement by providing a thoroughly documented example that ATR is indeed driving lender behaviors. Consideration of this phenomenon raises new questions of normative assumptions and legal doctrine—is it desirable to value financial stability over the financial inclusion of a given industry? How should the law balance those competing interests?

This Article provides a novel assessment of those questions and their potential ramifications and proposes potential solutions.