Bipartisan Legislation Reintroduced in Congress to Ensure Cannabis Businesses Have Access to Insurance Coverage

U.S. Sen. Bob Menendez, D-N.J., announced May 2 that he led his colleagues to reintroduce the Clarifying Law Around Insurance of Marijuana (CLAIM) Act to ensure that state-legal cannabis business have access to insurance coverage.

Menendez, a senior member of the Senate Banking Committee and chairman of the subcommittee that oversees the insurance industry, is joined in reintroducing the bill by Sens. Rand Paul, R-Ky., Jon Tester, D-Mont., Steve Daines, R-Mont., and Jeff Merkley, D-Ore.

“In 2020, the people of New Jersey made it clear they overwhelmingly approved of recreational marijuana use, the governor and state Legislature have acted, and now it’s time for the federal government to eliminate barriers that currently keep state-authorized cannabis businesses from accessing affordable and comprehensive insurance coverage,” Menendez said in a public statement. “Current federal law bars small business owners from accessing the tools available to them to thrive and protect their property, employees, and customers. Our legislation is simple and would finally level the playing field for legal cannabis businesses by allowing them to fully operate just as any other legal small business would: by permitting insurance companies to provide coverage to these enterprises without risking federal prosecution.”

State-legal cannabis operators are often denied access to the insurance market under current federal law, according to the press release from Menendez’s office. Businesses in the industry can also experience obstacles in accessing bank financing if they lack proper insurance.

The CLAIM Act aims to ensure that cannabis operators can access worker’s compensation, property, casualty and title insurance.

According to the press release, the legislation would:

• Prohibit penalizing or discouraging an insurer from providing coverage to a state-sanctioned and regulated cannabis business, or an associated business (such as a cleaning service or landlord providing services to a legal cannabis business);
• Prohibit the termination or limitation of an insurer’s policies solely because the insurer has engaged in the business of insurance in connection with a cannabis-related business;
• 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;
• Prohibit the federal government from taking any adverse or corrective supervisory action on a policy to an owner or operator of a cannabis-related business or real estate or equipment that is leased to a cannabis-related business, solely because the owner or operator is engaged with a cannabis or cannabis-related business; and
• Protect employees of an insurer from any liability solely for engaging in the business of insurance with a cannabis or cannabis-related business.

U.S. Reps. Nydia Velázquez, D-N.Y., and Warren Davidson, R-Ohio, have reintroduced the House version of the CLAIM Act.

“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,” Paul said in a public statement. “The states are making their own decisions on these issues, and it’s time for the federal government to accept that.”

Paul, Menendez and Tester also support the Secure and Fair Enforcement (SAFE) Banking Act, which was reintroduced last month by Merkley and Daines. That legislation, which would provide a safe harbor for financial institutions that provide services to the cannabis industry, has bipartisan support from 35 co-sponsors. The House version of the bill is sponsored by Reps. Dave Joyce, R-Ohio, and Earl Blumenauer, D-Ore., and has eight original co-sponsors.

RELATED: US Senator Urges Senate to Approve SAFE Banking Act During Banking Hearing

“State legal cannabis businesses should not be shut out from the kind of tools and financial services all businesses require to thrive—including insurance to protect stores, customers, and workers from an unexpected emergency,” Merkley said in a public statement. “Our SAFE Banking Act of 2023 includes provisions like the CLAIM Act, and I look forward to working to advance the CLAIM Act as we work to move cannabis banking legislation through committee and onto the floor.”

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