U.S. Senator Bob Menendez introduced a law to bring access to insurance coverage to cannabis businesses March 18 alongside Sens. Rand Paul (R-Ky.) and Jeff Merkley (D-Ore.).
Forty-four states have some type of legal cannabis. November voters in New Jersey, Arizona, Montana, Mississippi and South Dakota approved legal adult use cannabis; and last month, New Jersey enacted legislation to officially legalize and regulate adult use cannabis.
However, cannabis businesses face challenges accessing insurance coverage.
“The voters in New Jersey spoke loud and clear this November when they overwhelmingly approved of recreational marijuana use, the governor and state legislature have acted, and now it’s time for the federal government to take the shackles off of state-authorized cannabis businesses, allowing this burgeoning industry to thrive,” said Menendez in a statement. “Current federal law prevents these small business owners from getting insurance coverage, and without it, they can’t protect their property, employees or customers. Our legislation simply levels the playing field for legal cannabis businesses, allowing them to fully operate just as any other legal small business would by permitting insurance companies to provide coverage to these enterprises without risk of federal prosecution or other unintended consequences.”
The principles behind the Clarifying Law Around Insurance of Marijuana Act of 2021, Paul said, are to respect the voices of the people, and to stop shutting out legitimate businesses from obtaining basic business protections.
“The states are making their own decisions on these issues, and it’s time for the federal government to accept that,” Paul said.
The CLAIM Act allows legal cannabis businesses access to insurance products such as worker’s compensation, property, casualty and title insurance. These state-authorized cannabis businesses are often denied access to the insurance market because the businesses could be prosecuted or face penalties under federal law.
Businesses can also be denied bank financing if they do not have the proper insurance. Under the CLAIM Act, insurers couldn’t be penalized or discouraged from providing coverage to a state-sanctioned and regulated cannabis business or ancillary business; and policies can’t be limited solely because the insurer engaged with a cannabis-related business.
Under the CLAIM Act, the federal government wouldn’t be able to take any adverse or corrective supervisory action on a policy to an owner or operator of a cannabis-related business or real estate or equipment that is leased to a cannabis-related business, solely because the owner or operator is engaged with cannabis or cannabis-related business.