More and more states are legalizing marijuana for either medical or recreational use or both; growers, dispensaries, and other companies are forming in order to meet demand. These organizations need insurance, just like everyone else. However, because marijuana is still federally illegal, obtaining insurance is difficult if not impossible for companies to obtain. Senators Menendez, Paul, Merkley and Cramer introduced a Senate bill in 2019 ensuring access to insurance for cannabis-related businesses. A revision to that bill was introduced in 2021.

It was called the Clarifying Law Around Insurance of Marijuana, or CLAIM Act. The act first defines a number of terms. Cannabis is defined as marijuana as defined in the Controlled Substances Act (21 U.S. C. 802).  That defines marijuana  as all parts of the cannabis sativa L. plant, whether growing or not, the seeds, extracted resin, and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, seeds or resin.

Cannabis Product

A Cannabis Product is anything containing cannabis, including concentrates, edibles, tincture, topicals, flowers, or a cannabis-infused product. The 2021 version removes flowers from this definition.

Cannabis-related Business

A Cannabis-related business is a manufacturer, producer, or any person or company that engages in any business or organized activity involving cannabis or cannabis products. The 2021 Act makes a point of defining a cannabis-related legitimate business, as there is still an enormous black market available for the product.

Such activity includes cultivating, producing, manufacturing, selling, transporting, dispensing, distributing, purchasing or displaying any cannabis or cannabis-derived products or deriving any proceeds from such. Therefore, growers, processors, dispensaries, and related businesses are all cannabis-related businesses by definition. Also included are organizations providing any financial services including retirement plans, exchange trade funds; renting, selling or leasing property; legal services, business services or ancillary services related to cannabis. This addresses not only banks and credit unions, but building owners, equipment suppliers, and other providers of services an organization may need.

Financial Service

The 2021 revision to the definition of financial service is extensive and goes into detail about what is considered a financial service. Along with insurance, included as a financial service is the authorizing, processing, clearing, transferring for deposit, transmitting, delivering, reconciling or otherwise effectuating or facilitating payments or funds where such payments are made by any means including credit cards, payment cards, other access accounts, checks, or electronic fund transfers. Also included is businesses acting as a money transmitting business directly or indirectly using depository institutions in connection with facilitating a payment for a cannabis-related legitimate business or service provider and acting as an armored car service for processing and depositing with depository institutions or Federal Reserve banks with respect to any monetary instruments.

Federal Agency

The definition of Federal Agency refers to terms in the United States Code section 105 title 5, and also includes a private attorney as defined in section 3002(1)(B) of title 28 of the code. Likewise, the term financial service is a means of financial product or service as defined in section 1002 of the Dodd-Frank Wall Street Reform Act and includes the business of insurance, and the terms Indian Country, Indian Tribe, and Insurer all refer to various sections of the U.S. Code.

Manufacturer

Manufacturer is defined as a person or company who manufactures, compounds, conveys, processes, prepares or packages cannabis or cannabis products. A Producer is the person planting, cultivating, harvesting or in any way dealing with the growth of the cannabis itself.

State

A state is each of the states, including the District of Columbia, Puerto Rico, and any United States territories or possessions.

Abilities of Federal Agency

Next, the act outlines what a Federal Agency may not do, including prohibiting, penalizing or discouraging an insurer from engaging in the business of insurance in connection with a cannabis-related business or a state, political subdivision of a state, or Indian tribe exercising jurisdiction over cannabis-related businesses. The Federal Agency may not terminate, cancel or limit an insurer's policies because the insurer engaged in business with a cannabis-related business, nor can an agency discourage or incentivize insurers from engaging in such business or in downgrading or canceling business if the insured is involved in a cannabis-related business as a manufacturer, producer, owner, employee of any such business. Likewise, the insurer is not to take any adverse or corrective action on a policy for a cannabis-related business solely because the owner or operator is a cannabis-related business, nor is the insurer to take any such action against employees, service providers, or owners of real estate or equipment because the person or organization works for or with cannabis-related companies. Federal agencies cannot force insurers to discriminate against any potential insured involved with the cannabis business.

Protections

Certain protections under Federal law are outlined. These protections involve engaging in the business of insurance within states, subdivisions of states or Indian country that allows the cultivation, manufacture, processing and other cannabis related activities pursuant to laws of the respective states, political subdivisions or Indian countries. Insurers in such activities may not be held liable pursuant to any Federal law for solely engaging in the business of insurance, or for further investing any income derived from the business of insurance. This is stating that activities and funds received because of insurance transactions related to marijuana are not subject to Federal laws restricting it.