A bipartisan group of senators has introduced the Clarifying Law Around Insurance of Marijuana Act, or CLAIM Act, which would create a federal safe harbor for insurers that provide coverage to cannabis businesses operating legally under state law. The legislation is designed to address the long-standing conflict between state cannabis legalization and federal prohibition, which has discouraged some insurers from entering the market because of potential federal regulatory consequences.
The bill would prohibit federal agencies from penalizing, discouraging, or taking supervisory action against insurers solely because they insure licensed cannabis businesses. It also protects insurers, their executives, and employees from federal liability based only on providing insurance coverage or reinvesting income generated from those policies. Landlords leasing property to cannabis businesses would receive similar protections from federal regulatory action.
For claims professionals, the legislation could help stabilize and expand the insurance market for cannabis-related risks. Greater insurer participation may lead to more commercial property, general liability, commercial auto, workers’ compensation, and other policies written for cannabis businesses. That would likely increase claims activity in a sector with unique exposures, including crop losses, theft, fire, equipment failures, product liability, and workplace injuries.
The proposal does not require insurers to write cannabis business coverage, nor does it change the balance of state insurance regulation under the McCarran-Ferguson Act or alter the Dodd-Frank Act. It also directs the Government Accountability Office to study barriers that minority-owned and women-owned cannabis businesses face when seeking financial services, with findings to be reported to Congress.
The CLAIM Act remains in the early stages of the legislative process. It has been referred to the Senate Committee on Banking, Housing, and Urban Affairs and must pass both chambers of Congress before being sent to the president for signature.
