The mainstream insurance industry is renewing its push to serve cannabis businesses without risk of penalties from federal regulators.
A coalition of nine insurance trade associations want Congress to pass a bill called the Clarifying Law Around Insurance of Marijuana Act, according to Insurance Business.
Introduced on Sept. 16 by Democratic U.S. Rep. Nydia Velazquez of New York and Republican U.S. Rep. Warren Davidson of Ohio, the bill “would shield insurers, brokers and agents from federal penalties for serving state-licensed cannabis businesses,” the lawmakers said in a news release.
That in turn could encourage state-licensed insurance companies to offer policies to cannabis businesses, which for now are mostly relegated to high-risk non-admitted carriers.
How can cannabis operators get better insurance?
Trade groups supporting the bill include:
- American Property Casualty Insurance Association
- Council of Insurance Agents & Brokers
- Independent Insurance Agents & Brokers of America
- National Association of Mutual Insurance Companies
- Wholesale & Specialty Insurance Association
“By resolving the legal uncertainty presented by the dueling state and federal treatment of marijuana, the insurance industry can serve both cannabis-related legitimate businesses and other commercial lines consumers, as well as personal lines consumers who may have a direct or indirect relationship to state-legalized cannabis, and still be in compliance with the law,” the groups said, according to Insurance Business.
Like marijuana banking reform efforts, CLAIM wouldn’t require any carrier to write cannabis policies, but it would remove the federal risk that keeps most of them from doing so, Insurance Business reported.
Most cannabis coverage is now in the non-admitted or excess and surplus market. That’s because admitted carriers with a state license fear federal liability.
Surplus policies cost more than those offered by admitted carriers, according to insurance experts.
Is insurance as challenging as banking for cannabis operators?
The insurance conundrum is similar to the situation around cannabis banking.
For years, both the cannabis industry and banking lobbies have pushed for federal legislation that would encourage more commercial banks to serve the industry.
However, efforts to pass such a bill have stalled.
Over the summer, lawmakers reintroduced the SAFER Banking Act.
The push comes as federal marijuana rescheduling advances.
The Trump administration’s Department of Justice reclassified medical cannabis as a Schedule 3 drug in April.
Most operators are in the adult-use industry, and adult-use marijuana is still Schedule 1.
