Marijuana is currently legal in varying degrees in 29 states and the District of Columbia, with legalization pending in two additional states. Attempts to legalize marijuana failed in 2017 in 13 states, as it is still federally illegal as a Schedule 1 controlled substance.
A Schedule 1 controlled substance is illegal to possess or use under federal law. As it has historically been illegal, growing and selling marijuana operations have been considered uninsurable due to general policy provisions excluding coverage for illegal activities, or the public policy against insuring illegal actions.
According to the McCarran Ferguson Act, though, regulation of insurance is to be left to the individual states. Most state statutes that legalize marijuana expressly grant an insurable interest in marijuana up to the legal quantity. Since recreational use of marijuana is currently legal in eight states plus Washington, D.C., those state statutes can legalize insuring marijuana. The laws are not uniform across the states where medical or recreational marijuana is legal, and this becomes a confusing issue for both policyholders and insurers.
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