There’s an extra layer of protection for cannabis businesses on the horizon.
A bipartisan bill refiled in the Senate in March would provide state-legal cannabis businesses broad access to insurance coverage. A secondary gain here is that those insurance companies would be protected from punishment by federal regulators. This corresponds to the filing of a bill that would increase industry access to desperately needed banking services.
The bill, sponsored by Democratic New Jersey Senator Bob Menendez, is called the Clarifying Law Around Insurance of Marijuana (CLAIM) Act. Sens. Rand Paul (R-KY) and Jeff Merkley (D-OR) are also original cosponsors of the CLAIM Act. Neighboring state Rep. Nydia Velazquez (D-NY) introduced a companion version in the House, just like she did last year.
“Current federal law prevents these small business owners from getting insurance coverage, and without it, they can’t protect their property, employees, or customers,” Menendez said in a press release. “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.”
Right now, cannabis businesses are limited in their ability to gain property, casualty, and title insurance coverage. The CLAIM Act would prohibit penalizing insurance providers for covering marijuana-industry businesses, preventing insurers from terminating or limiting policies applicable to the legal marijuana industry.
The most recently filed bill includes language expanding the definition of what a cannabis-related business or financial service is, specifically defining a marijuana-related co company as one providing “any financial service, including retirement plans or exchange-traded funds, relating to cannabis” and also one that provides “any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to cannabis.”
In a summary of the legislation, it would prohibit “recommending, incentivizing, or encouraging an insurer not to engage in the business of insurance in connection with a policyholder, or downgrade or cancel the insurance offered to a cannabis or cannabis-related business.”
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