The SAFE Banking Act, long seen as the most viable piece of standalone cannabis reform legislation in the US Congress, has been officially reintroduced in the Senate as S. 1327, marking a renewed effort in the 119th Congress to provide legal financial services to state-licensed cannabis businesses. First filed on 14 January 2026 by Senators Jeff Merkley (D-OR) and Steve Daines (R-MT), the bill has already cleared a critical hurdle: a hearing before the Senate Banking, Housing, and Urban Affairs Committee on 11 February 2026.
Bipartisan Support and Committee Progress
The committee hearing featured testimony from state banking regulators, small business owners, and public safety officials, all of whom emphasised that the current cash-only environment for cannabis dispensaries creates significant risks for armed robbery and tax evasion. ‘This is not a pro-cannabis or anti-cannabis vote. It is a pro-public safety vote,’ said Senator Daines during opening remarks. The bill currently enjoys the cosponsorship of 34 senators, evenly split between Democrats and Republicans, reflecting what analysts describe as the strongest bipartisan coalition for cannabis banking reform to date. A mark-up session is scheduled for 10 March 2026, where the committee is expected to vote on a substitute amendment.
Key Amendment: Section 280E Reform
A notable change in this version of the SAFE Banking Act is the inclusion of a narrow amendment to Section 280E of the Internal Revenue Code, the federal tax provision that prevents cannabis businesses from deducting ordinary business expenses. The amendment, spearheaded by Senator Ron Wyden (D-OR) and supported by several moderate Republicans, would allow state-licensed cannabis operators to claim deductions for expenses directly related to the cost of goods sold, effectively aligning their tax treatment with that of other legal industries. ‘Without fixing 280E, the banking relief is incomplete. Businesses will still be taxed into insolvency,’ Wyden argued during the hearing. The amendment has drawn cautious support from the National Cannabis Industry Association, though some conservative members have expressed concerns about broadening the bill’s scope.
Likelihood of Passage in the 119th Congress
Political observers are cautiously optimistic about the bill’s chances. Senate Majority Leader Chuck Schumer (D-NY) has placed S. 1327 on the leadership’s priority list for a floor vote before the August 2026 recess. However, procedural hurdles remain. Senate Banking Committee Chairman Tim Scott (R-SC) has signalled openness but has demanded that the bill include provisions to prevent cannabis companies from using federal deposit insurance as a marketing tool. A companion bill, H.R. 2891, has been introduced in the House of Representatives by Representatives Dave Joyce (R-OH) and Earl Blumenauer (D-OR), where it is expected to pass with a comfortable bipartisan majority. The most significant obstacle remains the filibuster in the Senate, where 60 votes are needed to advance. With 34 cosponsors and growing support from law enforcement groups, advocates believe the bill could attract the necessary cross-party support. ‘This is the closest we have ever been. The question is not if, but when,’ said a senior aide to Senator Merkley. If passed, the SAFE Banking Act would represent the first major federal cannabis reform since the 2018 Farm Bill.
