Menendez introduces bipartisan marijuana insurance law as more states enact cannabis laws


U.S. Senator Bob Menendez (D-NJ), a senior member of the Senate Banking Committee and chairman of the subcommittee that oversees the insurance industry, today announced the introduction of bipartisan legislation to ensure legal marijuana and related businesses have access to extensive access and affordable insurance have coverage. The Marijuana Clearance Act (CLAIM) of 2021 is endorsed by Sens. Rand Paul (R-Ky.) And Jeff Merkley (D-Ore.).

All but six states have marijuana legalization or decriminalization laws on the books for recreational or medical purposes. In the 2020 election, voters in New Jersey, Arizona, Montana, Mississippi, and South Dakota approved the creation or expansion of the legal use of marijuana. Last month, New Jersey, which had legalized cannabis for medicinal purposes, enacted historic reform laws that legalized and regulated adult recreational use.

“New Jersey voters spoke loud and clear this November when they overwhelmingly endorsed recreational marijuana use. The state governor and lawmaker have acted, and now it is time for the federal government to take off the shackles of state-licensed cannabis companies and allow this emerging industry to flourish, “Senator Menendez said. “Current federal law prevents these small business owners from getting insurance, and without it, they cannot protect their property, employees or customers. Our legislation only levels the playing field for legal cannabis companies and allows them to operate fully like any other legal small business by allowing insurance companies to insure those companies without the risk of federal prosecution or other unintended consequences. “

“The principles of the CLAIM Act are simple: respect the votes of states and their people, and lock down legitimate businesses from getting basic protections,” said Senator Paul. “States make their own decisions on these issues and it is time for the federal government to accept it.”

“Government legal cannabis companies should not be excluded from the tools and financial services all businesses need to be successful – including insurance to protect businesses, customers and workers from an unexpected emergency,” said Senator Merkley. “It is time to pass the CLAIM bill so we can adhere to this principle and continue to work together to support our local businesses.”

The CLAIM Act ensures that companies operating under state laws that have legalized recreational or medical marijuana have access to insurance products such as employee compensation, property, casualty, and property insurance. Because they face criminal or penalties under federal law, these state-licensed cannabis companies are often denied access to the insurance market, leaving them vulnerable and putting the safety of employees, customers and the community at risk. Companies can also be denied bank financing if they do not have the appropriate insurance.

The CLAIM Act would:

  • Prohibition to penalize or dissuade an insurer from insuring a government-sanctioned and regulated cannabis business or an affiliate (such as a cleaning company or a rental company providing services to a legal cannabis business);
  • Prohibit the termination or restriction of an insurer’s insurance policies only because the insurer has entered into insurance business in connection with a cannabis-related business;
  • Prohibition from recommending, incentivizing or encouraging an insurer not to deal with policyholders in connection with a policyholder, or downgrading or canceling the insurance offered to a cannabis or cannabis business;
  • Prohibit the federal government from taking adverse or corrective oversight of a policy against an owner or operator of a cannabis-related business or property or equipment rented to a cannabis business simply because the owner or operator instructs it to do so is a cannabis or cannabis-related business; and
  • Protect the employees of an insurer from any liability that exists solely for the insurance business with a cannabis or a cannabis-related business.

Sens. Menendez and Paul also endorsed the Secure and Fair Enforcement (SAFE) Banking Act of 2019 that Senator Merkley introduced in last Congress to ensure legal marijuana companies have access to banking services such as lines of credit and savings, and checking accounts, processing Customer credit cards and employee pay slips.

Congresswoman Nydia M. Velazquez (DN.Y.-07) plans to introduce accompanying laws in the House of Representatives.

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