Insurance Companies That Work With Marijuana Businesses Would Be Protected Under Bipartisan Congressional Bill

Bipartisan congressional lawmakers refiled another marijuana bill on Thursday—this one proposing to provide a safe harbor to insurance companies that work with state-legal cannabis businesses.

The Clarifying Law Around Insurance of Marijuana (CLAIM) Act is being sponsored Reps. Nydia M. Velázquez (D-NY) and Warren Davidson (R-OH). This is the third Congress in a row that the measure has been introduced.

The legislation would protect insurers, brokers and agents from being penalized by federal regulators for providing insurance services to state-licensed marijuana companies. It was filed just one day after House and Senate lawmakers filed a related bill to safeguard banks that work with the industry.

“Insurance companies are often times reluctant to provide coverage to cannabis-based businesses, due to discrepancies between federal and state laws,” Velázquez said in a press release.

Cannabis businesses deserve the same access to insurance as any other legitimate enterprise.

Today, I intro’d the CLAIM Act with @WarrenDavidson to ensure legal cannabis entrepreneurs can get the insurance they need to protect their livelihoods.https://t.co/RwvOE5McMD

— Rep. Nydia Velazquez (@NydiaVelazquez) April 27, 2023

“These promising new businesses have no safety net in place and are left extremely vulnerable to natural disasters or fires that may destroy all they’ve worked to build,” the congresswoman said. “This bill will help entrepreneurs operating in the legal cannabis sector access to the insurance they need to protect their business.”

Davidson said that insurance firms “must be allowed to participate for the marketplace to function properly, they play a critical role for the development of small businesses.”

“The CLAIM Act takes needed corrective action by granting the ability to insure risk without having otherwise lawful markets blocked by regulators,” he said.

This latest version of the CLAIM Act is identical to the bill filed last Congress. On the Senate side, it has been sponsored by Sen. Bob Menendez (D-NJ) but hasn’t yet been refiled this year.

As it stands, cannabis firms are restricted in their ability to gain property, casualty and title insurance coverage. This bill would prohibit penalizing insurance providers for simply covering those businesses, and it would bar insurers from terminating or limiting policies for marijuana companies or ancillary businesses due to the nature of their enterprise.

The legislation also includes a requirement that the Government Accountability Office (GAO) study and issue a report on “barriers to marketplace entry, including in the licensing process, and the access to financial services for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.”

It also provides protections for employees of insurers, affirming that they could not be held liable just because they work with a cannabis company.

Supporters of the legislation have argued that providing insurance access to these businesses would mitigate safety risks and prevent the companies from being denied bank financing, which can occur when the businesses lack insurance coverage.

Like last session, the reintroduction of the proposal roughly coincides with the filing of the bipartisan Secure and Fair Enforcement (SAFE) Banking Act to protect banks that provide financial services to the cannabis sector.

—
Marijuana Moment is tracking more than 1,000 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.
—

With a divided Congress that has Republicans in control of the House, the expectation is that lawmakers will need to focus on incremental marijuana measures like the banking bill, instead of broader justice-centered legalization, to get any amount of reform passed this session.

Last week, Senate Majority Leader Chuck Schumer (D-NY) said that he was “disappointed” that a so-called SAFE Plus package of marijuana banking and expungements legislation he worked on last year didn’t advance, saying “we came close,” but “we ran into opposition in the last minute.” He said lawmakers will continue to “work in a bipartisan way” to get the job done.

“Until we reach our goal, I promise to be in your corner and work like hell bringing federal cannabis policy into the 21st century,” he said. “We will need you, as we always do, to reach out to members of both parties, in both chambers—especially Republican—so we can make progress on cannabis reform.”

The majority leader has been holding meetings with Democratic and Republican members in the early months of the new Congress to discuss cannabis reform proposals that might have bipartisan buy-in this year.

For his part, Sen. Cory Booker (D-NJ) said recently that lawmakers are working to “resurrect” the cannabis reform package, acknowledging that failure to advance a banking fix for the industry “literally means that hundreds of businesses go out of business.

Rep. Earl Blumenauer (D-OR), who filed a bill to allow marijuana businesses to take federal tax deductions last week, said at a recent press briefing that thinks it’s important that advocates and lawmakers align on any incremental proposals to end the drug war, warning against an “all-or-nothing” mentality.

Meanwhile, a number of other cannabis bills were filed last week leading up to 4/20, though lawmakers didn’t explicitly say that the timing was related to the unofficial marijuana holiday.

For example, Rep. Brian Mast (R-FL) introduced legislation last week to protect the Second Amendment rights of people who use marijuana in legal states, allowing them to purchase and possess firearms that they’re currently prohibited from having under federal law.

Reps. Dave Joyce (R-OH) and Alexandria Ocasio-Cortez (D-NY) have filed a bill to incentive state and local marijuana expungements with a federal grant program.

Earlier this month, Joyce and House Minority Leader Hakeem Jeffries (D-NY) filed a measure designed to prepare the federal government for marijuana legalization, directing the attorney general to form a commission to study and make recommendations about regulating cannabis in a way similar to alcohol.

Federal Law Enforcement Agency Says State-Legal Marijuana Activity Will No Longer Automatically Disqualify Job Applicants