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Cannabis insurance bill targets federal barriers to admitting more carriers
The Clarifying Law Around Insurance of Marijuana Act, introduced Sept. 16, would create a federal safe harbor by limiting penalties and discouragement for insuring qualifying cannabis businesses under state, local, or tribal law.
Insurance Business reports that cannabis businesses still rely heavily on non-admitted insurers for coverage, with capacity uneven and limits often too low for larger operators. The National Association of Insurance Commissioners says many cannabis-related risks are placed in the non-admitted market, with gaps affecting smaller companies, ancillary services, cannabis-infused products, and social consumption lounges.
According to Insurance Business, Rep. Nydia Velázquez, D-N.Y., and Rep. Warren Davidson, R-Ohio, introduced the Clarifying Law Around Insurance of Marijuana Act on September 16. The bill would protect insurers, agents, and brokers from certain federal penalties and liabilities when serving cannabis businesses that operate legally under state, local, or tribal law.
Insurance Business notes that NAIC data show insurers commonly offer $1 million per occurrence and $2 million aggregate limits for cannabis-related commercial general liability, property, and product liability, while some businesses may need $5 million to $10 million or more. The federal safe harbor would not require insurers to write cannabis risks or change underlying exposures, but it would remove federal legal consequences arising solely from insuring a qualifying cannabis business.
Insurance Business adds that under the bill, federal agencies could not prohibit, penalize, or discourage coverage for qualifying cannabis activities, and regulators would be barred from pressuring carriers to cancel, downgrade, or limit coverage on that basis. A Senate version was introduced in July by Sens. Kevin Cramer, R-N.D., and Ruben Gallego, D-Ariz.