Legislation introduced in Congress earlier this month that would allow insurers to cover cannabis businesses in many states without the threat of federal penalties would provide relief for the sector and has a good chance of passing, experts say.
The Clarifying Law Around Insurance of Marijuana Act of 2021, which has bipartisan support, could help open insurance markets for cannabis operators and companies in their supply chains, they say.
According to the text of the bill, which was introduced March 18 and is an update of 2019 legislation, its intention is “To create a safe harbor for insurers engaging in the business of insurance in connection with a cannabis-related legitimate business, and for other purposes.”
The legislation is sponsored by Senators Bob Menendez, D-N.J., Rand Paul, R-Ky., and Jeff Merkley, D-Ore., and Representatives Nydia Velázquez, D-N.Y., and Steve Stivers, R-Ohio.
The impetus behind the legislation is the differences between state and federal law. Although laws differ, most states allow some form of cannabis use — recreational, medical or cannabis-derived products — but the drug’s use remains illegal under federal law. While some insurers offer coverage to cannabis companies in the United States, many others are deterred by the potential for sanction under federal law.
A spokesman from Senator Menendez’s office called the measure “common-sense legislation” to help provide access to “basic tools” for business including insurance. The CLAIM Act also “recognizes states’ rights,” he said.
“The CLAIM Act is a comprehensive solution to provide legal certainty for our market while also preserving the states’ traditional role in regulating the business of insurance. We urge Congress to pass this commonsense legislation,” Nat Wienecke, senior vice president of federal government relations for the American Property Casualty Insurance Association, said in an e-mail.
Published: March 30, 2021
Founder & Interim Editor of L.A. Cannabis News