A bipartisan bill refiled in the Senate on Thursday would give state-legal marijuana businesses greater access to insurance coverage and protect the companies that offer those plans from being punished by federal regulators.
The measure’s introduction comes on the same day that a much-anticipated bill is set to be filed that would increase the cannabis industry’s access to banking services.
Sen. Bob Menendez (D-NJ) is the sponsor of the marijuana insurance legislation, titled the Clarifying Law Around Insurance of Marijuana (CLAIM) Act. Rep. Nydia Velazquez (D-NY) will soon be introducing a companion version in the House, as she did last Congress.
As it stands, cannabis firms are restricted in their ability to gain property, casualty and title insurance coverage. This bill would prohibit penalizing insurance providers for simply covering those businesses, and it would bar insurers from terminating or limiting policies for marijuana companies or ancillary businesses due to the nature of their enterprise.
2/ The CLAIM Act is a major step forward for business owners, employees, and customers. It’s time to remove these federal strangleholds and let the cannabis industry thrive.https://t.co/sS8AbpVhZD
— Senator Bob Menendez (@SenatorMenendez) March 18, 2021
Further, 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,” a summary of the legislation states.
Sens. Rand Paul (R-KY) and Jeff Merkley (D-OR) are also original cosponsors of the CLAIM Act. But unlike last session, Sen. Kevin Cramer (R-ND) did not initially sign on to the new version.
“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.”
The newly filed version of the insurance bill includes additional language that wasn’t in the prior bill that expands the definition of what constitutes a cannabis-related business and a financial service.
A marijuana-related company is also one that provides “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.”
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The definition of a financial service was broadened to include “the authorizing, processing, clearing, settling, billing, transferring for deposit, transmitting, delivering, instructing to be delivered, reconciling, collecting, or otherwise effectuating or facilitating of payments or funds” when those payments are “made by any means” including credit cards or electronic funds transfers.
The legislation also includes a requirement that the Government Accountability Office (GAO) study and issue a report on “barriers to marketplace entry, including in the licensing process, and the access to financial services for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.” That language was included in the House version of the CLAIM Act last session.
Paul said that the “principles behind the CLAIM Act are simple: respect the voices of the states and their people and stop shutting out legitimate businesses from obtaining basic protections.”
The bill also provides protections for employees of insurers, affirming that they could not be held liable just because they work with a cannabis company.
“State legal cannabis businesses should not be shut out from the kind of tools and financial services all businesses need to thrive—including insurance to protect stores, customers, and workers from an unexpected emergency,” Merkley said. “It’s time to pass the CLAIM Act, so we can deliver on that principle, and continue working together to support our local businesses.”
Supporters of the legislation argue that providing insurance access to these businesses would mitigate safety risks and prevent the companies from being denied bank financing, which can occur when the businesses lack insurance coverage.
The timing of the refiling coincides with the reintroduction of the Secure and Fair Enforcement (SAFE) Banking Act—a significant piece of legislation that would free up banking access to cannabis businesses. It cleared the House as a standalone bill in 2019 and twice as part of COVID-relief packages—but it did not advance in the Senate under GOP control.
Read the text of the Senate marijuana insurance bill below:
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