A new bill in Congress could help cannabis business owners sleep a bit better at night.
The cannabis industry is largely uninsured because of the risks associated with providing coverage to a business that operates legally at a state level but illegally at a federal level. That could change with the Clarifying Law Around Insurance of Marijuana (CLAIM) Act of 2021, sponsored by New Jersey Senator Bob Menendez, a senior member of the Senate Banking Committee and chair of the subcommittee that oversees the insurance industry.
In New Jersey, Menendez’ home state, voters passed a legalization ballot measure in November, and lawmakers passed a bill to launch the program last month. That was part of the inspiration for Menendez to reintroduce the bill, which he introduced in the last Congress. In other words, “it’s time for the federal government to take the shackles off of state-authorized cannabis businesses, allowing this burgeoning industry to thrive,” Menendez said in a statement.
Menendez believes that “industries operating legally should have access to the same opportunities and basic products and services needed to do business. Why is it that a company growing tomatoes can get worker’s comp insurance to protect its employees, but a company growing marijuana in states, like New Jersey, where it’s legal and regulated, cannot? Why can a business that sells screwdrivers get insurance to protect its property and inventory, but a business that legally sells cannabis products cannot?” Steven Sandberg, press secretary for Menendez, told Cannabis Wire. “Very often insurance is also required for businesses seeking certain types of financing. It puts legal cannabis businesses at a disadvantage and their employees, customers and property at risk. The senator’s bill levels the playing field and will help the burgeoning industry grow and thrive.”
Senators Rand Paul and Jeff Merkley are co-sponsors in the Senate and Representative Nydia Velazquez is expected to introduce companion legislation in the House.
The CLAIM Act, if passed, would give state-legal adult use and medical cannabis business owners access, for example, to worker’s compensation and property, casualty, and title insurance.
The bill would protect insurance companies that want to work with the cannabis industry by blocking the federal government from “taking any adverse or corrective supervisory action on a policy to an owner or operator of a cannabis-related business or real estate or equipment” just because they’re in the cannabis industry, according to Menendez. It would also protect employees at insurance agencies from facing any consequences for working with cannabis business owners.
Cannabis business owners can also be denied banking services if they’re not adequately insured, in addition to the fact that they are often denied due to federal prohibition. The Secure and Fair Enforcement (SAFE) Banking Act, which would provide safe harbor to banking institutions that want to serve the cannabis industry, was reintroduced on Thursday by Colorado Rep. Ed Perlmutter. Menendez and Paul are also co-sponsors of the SAFE Banking Act.
The insurance industry has shown its interest in the cannabis industry through lobbying registrations on the SAFE Banking Act, as Cannabis Wire reported.
Among the entities that have registered: American Family Mutual Insurance Company, S.I., the American Land Title Association, the American Property Casualty Insurance Association fka Property Casualty Insurers, the Council of Insurance Agents and Brokers, the Independent Insurance Agents & Brokers Of America, the National Association of Mutual Insurance Companies, the Reinsurance Association of America, Sentry Insurance a Mutual Company, The Travelers Companies, Inc. and subsidiaries, and Wholesale & Specialty Insurance Association.
This story was updated with comments from Senator Bob Menendez’ spokesperson.
