The commercial cannabis industry may soon operate in a less restrictive environment and gain better access to insurance coverage as legislative and other federal and state efforts to lift restrictions on the sector are gaining momentum, experts say.
The Biden administration has signaled that its proposed criminal and racial reforms will include a review of drug laws.
In addition, a bill aimed at unifying federal and state laws could make it easier for cannabis companies to purchase insurance, experts say.
The Biden administration has had other priorities, such as the economy and the COVID-19 pandemic, since joining in January, but there have been "some encouraging signs" for the cannabis sector, says Andrew Kline, senior adviser to Perkins Coie LLP in Denver.
Mr. Kline, who worked for Mr. Biden, when he was a US senator and vice president, spoke last week during the first of a series of webinars on the cannabis sector produced by Business Insurance .
A statement from the Federal Office of National Drug Control states that the administration's first-year agenda will focus on "the need to eradicate racial, gender and economic inequalities that currently exist in the criminal justice system", as well as an emphasis on treatment rather than prison.
Other statements from Biden officials can also be encouraging for the cannabis industry, says Ian Stewart, president of the National Cannabis and Hemp Law Practice at Wilson Elser in Los Angeles.
For example, Attorney General Merrick Garland said during his Senate confirmation hearing that the Department of Justice prefers not to direct limited resources to prosecutions that are legal at the state level.
Michelle Rutter Friberg, Deputy Director of Government Relations at the National Cannabis Industry Association in Washington, said "it's really big" that cannabis-related questions are addressed and answered by senior administration officials.
Mr. Stewart noted a "domino effect" among states indicating that they will legalize or further legalize cannabis in various forms, including New York and Virginia, and a bill continues in Connecticut. He further predicted that states such as Minnesota and Wisconsin could also go further in the direction of legalization and that other states could soon follow.
"At the state level, things are not slowing down," Stewart said. [1
The SAFE Banking Act, which has more than 100 co-sponsors in the House, is "an important piece of legislation, and it helps minority owners of small businesses gain access to capital," says Kline.
Senators and representatives from states that have legalized cannabis may be more supportive of federal legislation such as the SAFE Banking Act, Stewart said.
"There is, to a large extent, a 'leak up' effect," Rutter said, referring to the welding of state and federal agendas. "When members of Congress have an interest, this becomes a bit of a different matter," she says.
In addition, the 2021 Marijuana Insurance Clarification Act, which was also introduced last month, is "very explicit in terms of what it allows for insurance companies specifically and insurance products," Stewart said.
The bill would provide a federal safe haven for insurance companies that cover cannabis companies where the sale of the drug is legal.Many insurers have been reluctant to cover the cannabis industry because the drug is still illegal under federal law.
The CLAIM Act could help broaden the insurance markets for cannabis operators, Stewart said. Coverage of management responsibilities, including board members and executives and error and omission insurance, has been particularly difficult and can benefit from expansion, he said.
"Insurance groups are behind both SAFE and CLAIM. This is definitely something that is on their radar, says Rutter.
Removing cannabis from narcotic sta tus according to scheme 1 is part of the cannabis industry's agenda but is seen as less achievable in the short term than SAFE and CLAIM legislation, panelists agreed.
A recording of the webinar and information about other sessions in the series can be found here.