U.S. Senator Bob Menendez, a senior member of the Senate Banking Committee, today announced the introduction of bipartisan legislation that ensures legal marijuana and related businesses have access to comprehensive and affordable insurance coverage. The Clarifying Law Around Insurance of Marijuana (CLAIM) Act is cosponsored by Rand Paul (R-Ky.), Jeff Merkley (D-Ore.) and Kevin Cramer (R-N.D.).
The Banking Committee, this morning, will hold a hearing with industry leaders on ensuring marijuana and related businesses operating in states where they have been legalized have access to the banking system. Sens. Menendez, Paul, Merkley, and Cramer recently introduced the Secure and Fair Enforcement (SAFE) Banking Act of 2019 to ensure that legal marijuana businesses can access banking services.
“With New Jersey just expanding their medical marijuana program, and other states across the country legalizing recreational and medical cannabis, we must ensure these businesses can fully operate just as any other legal small business would,” said Sen. Menendez. “Current federal law prevents these small business owners from getting insurance coverage, and without it, they can’t protect their property, employees, or customers. We can solve this problem with legislation that allows insurance companies to provide coverage to these enterprises without risk of federal prosecution or other unintended consequences.”
“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,” said Sen. Paul. “The states are making their own decisions on these issues, and it’s time for the federal government to accept that.”
“Federal law should not prohibit access to insurance for employees of local businesses these states voted to support, nor should it prohibit employers from acquiring insurance that protects their stores,” said Sen. Cramer. “This legislation takes a federalist approach by opening the insurance market to compliant businesses and preventing federal law from hindering employees’ market access.”
Cannabis businesses operating under state laws that have legalized recreational or medical marijuana are often denied access to the insurance market because insurance providers could be prosecuted or face penalties under federal law. Without access to insurance products such as property, casualty and title insurance, businesses remain vulnerable, and employees, customers, and the community face safety risks. Businesses can also be denied bank financing if they do not have the proper insurance.
The CLAIM Act would:
Prohibit penalizing or discouraging an insurer from providing coverage to a state-sanctioned and regulated cannabis business, or an associated business (such as an lawyer 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.
“Earlier this month, I was proud to sign Jake Honig’s Law, legislation that will expand access for New Jersey patients who could benefit from medical marijuana,” said New Jersey Governor Phil Murphy. “It is our responsibility to make sure that businesses associated with this life-changing medical treatment are treated similarly to other medical services providers. I thank Senator Menendez for introducing legislation that will protect the access of these businesses to insurance. We must do everything in our power to ensure patients have access to treatment.”
The National Cannabis Industry Association and the National Organization for the Reform of Marijuana Laws are supportive of the CLAIM Act.
At a Senate banking panel hearing in February, Sen. Menendez asked Federal Reserve Chairman Jerome Powell about the fact that most banks can’t service legal marijuana businesses because the drug remains illegal on the federal level. Powell agreed with Menendez that Congress should consider providing both financial institutions and insurance providers new clarity so that businesses can operate not only legally, but safely, and that local economies can benefit.