Legislation introduced in Congress earlier this month that would allow insurers to cover cannabis companies in many states without the threat of federal penalties would provide relief to the sector and have good opportunities to pass, experts say.
The Clarification Act Around Insurance of the Marijuana Act of 2021, which has bipartisan support, can help open up insurance markets for cannabis operators and companies in their supply chains, they say.
According to the bill, which was introduced on March 18 and is an update of the legislation from 2019, its intention is "To create a safe haven for insurance companies that conduct insurance activities in connection with a cannabis-related legitimate activity and for other purposes."
The legislation is sponsored by Senators Bob Menendez, DN.J., Rand Paul, R-Ky., And Jeff Merkley, D-Ore., And Representatives Nydia Velázquez, DN.Y., and Steve Stivers, R-Ohio.
The driving force behind the legislation is the differenc between state and federal law. Although the laws differ, most states allow some form of cannabis use ̵
A spokesman for Senator Menendez's office called the measure "common sense" to provide access to "basic tools" for companies including insurance. The CLAIM Act "also recognizes the rights of states", he said.
"The CLAIM Act is a comprehensive solution to provide legal certainty for our market while maintaining the traditional role of states in regulating insurance business. We urge Congress to pass this general legislation, "said Nat Wienecke, senior vice president of federal government for the American Property Casualty Insurance Association, in an email.
If approved, the measure would be a boost for cannabis. in the insurance sector, industry experts said.
"Any piece of federal law that explicitly recognizes the cannabis industry as legitimate would have the potential to significantly increase capacity for the insurance industry," said Justin M. Lehtonen, vice president of wholesale worldwide facilities in Los Angeles and added insurance companies and others. an opportunity to start supporting this activity. "
The cannabis industry "definitely needs some form of federal order," said Jay Virdi, Toronto-based sales manager for Hub International Ltd.'s cannabis insurance and risk services in the United States and Canada.
In addition to establishing a safe haven for insurance companies, the legislation is the company's piece of what should be several steps to provide a federal regulatory framework for the cannabis industry, which may include supervision and regulation, such as the Food and Drug Administration which monitors the quality and compliance of cannabis products , he said.
The CLAIM Act is designed specifically for the insurance industry and is easy to understand, says Ian A. Stewart, a partner with Wilson Elser Moskowitz Edelman & Dicker LLP in Los Angeles.
“It allows property / accidents and other types of insurance companies like life to operate. with a legal safe haven, "when it comes to accepting cannabis-derived money," he said.
The new legislation changes some definitions from the 2019 version, including those for "financial services" and "cannabis-related companies" to make them broader and more inclusive, Stewart said.
Cannabis companies would benefit from increased competition between insurance companies, which could help lower insurance prices, create more choices in some in-line, and alleviate capacity and policy language constraints in the corporate liability insurance market, Stewart said.
The CLAIM Act would help companies with direct or indirect contact with state-legalized cannabis, gain access to insurance products and services and the protection they provide, Wienecke said.
However, change will not happen overnight, and all new insurance industry participants entering the sector will need to navigate a "learning curve" for the cannabis industry, says Virdi from Hub.
Insurance groups have welcomed the legislation, and "this time I think there is a clear optimism about passage," Stewart said.
The Senate and House CLAIM Act bills are bipartisan and bicameral, and the momentum for Congress to pass the law has continued to build, said Nicole Austin, senior vice president of federal affairs for the Reinsurance Association of America, in an email.
“People from states with significant activity already in the cannabis industry want to see this move forward. There is political will, says Lehtonen from Worldwide Facilities.
In addition, more states have a significant amount of cannabis-related tax revenue, he said, adding: "There are many places in the country that have already seen the direct benefit."
"If you look at how much tax revenue generated by the cannabis industry is "The United States can really benefit from this revenue," said Virdi.