California bill aims to end the cannabis insurance coverage confusion
The bill would make it clear that providing coverage to legal cannabis-touching businesses is not a criminal activity.
California’s legislative session came to a close, wrapping up what was a productive eight months for the cannabis industry lobby which saw state lawmakers send the governor bills clarifying insurance coverage issues, creating workplace protections for marijuana users, establishing groundwork for interstate cannabis commerce and requiring cities to allow some type of medical marijuana delivery.
Lindsay Robinson, executive director of the California Cannabis Industry Association, credited the legislative success with “folks being more comfortable with cannabis policy” six years after voters approved recreational use in the Golden State. And, she said, “a real recognition happened this year of just how much the industry is struggling.”
Here’s a look at some of the legislation awaiting action by Gov. Gavin Newsom.
>> Insurance. AB 2568 clarifies that insurers can sell policies to legally operating cannabis businesses. Specifically, the bill provides that it is not a crime solely for individuals and firms to provide insurance and related services to persons that are legally licensed to engage in commercial cannabis activity.
>> Workplace testing. AB 2188 makes it illegal in most cases to discriminate against a job candidate or employee who uses marijuana, so long as they are not impaired at work. If Newsom signs the bill into law, California will become the latest state to wade into the thorny debate over how to balance an employer’s right to create a drug-free workplace while protecting employees who legally consume cannabis.
The bill “is limiting employers with respect to the ability to test and take action against employees who have used a substance off-duty and who are reporting to work without an impairment,” said Chris Olmsted, an employment law partner in Ogletree Deakins‘ San Diego office. “That is a change in that historically, a business could impose a drug testing policy on applicants and employees and if it detected any level of the marijuana metabolite in the person’s system, they could take adverse action against the worker. That’s no longer going to be the case.”
Notably, the bill amends the state’s Fair Employment and Housing Act, which has historically protected workers from harassment and discrimination based on gender, sexual orientation and disabilities.
“I’m seeing commentators note that this is putting drug use on par with these characteristics, which some people say is a little puzzling,” Olmsted said. “Ultimately, if there’s ever going to be litigation on this topic, it remains to be seen how that will matter.”
>> Cannabis delivery. SB 1186 will prohibit cities and counties, starting in 2024, from barring medical marijuana deliveries within their boundaries, even in jurisdictions that chose not to allow dispensaries or other cannabis-related operations.
Although California has allowed medical marijuana use since 1996, the state has historically given local governments broad latitude to decide whether to allow licensed cannabis operations in their jurisdictions. Industry advocates say that encourages the illicit market to flourish in cities and counties with bans.
Local governments will still be able to enact “reasonable” regulations on zoning, security requirements and tax enforcement.
>> Interstate cannabis agreements. Marijuana may still be illegal at the federal level, but SB 1326 authorizes the governor to sign import-export agreements with other states that regulate cannabis. Such agreements would have to meet certain labeling, tracking and testing standards.
Robinson said any kind of interstate trade is probably several years away given federal prohibition, but the bill sets “a strong foundation” for future agreements. Recreational and medical-use marijuana is now legal in all of California’s neighboring states.
Another measure passed by the California Legislature this term is AB 1885, which allows veterinarians to recommend marijuana products for ailing pets.
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