Procuring insurance for businesses engaged in the cannabis industry can be challenging. Indeed, while cannabis businesses are legal under the laws of most states, cannabis remains a Schedule 1 substance under the Controlled Substances Act of 1970, which means that, under federal law, it is illegal to manufacture, sell or distribute cannabis. It also is illegal at the federal level, under some circumstances, to engage in monetary transactions involving cannabis products. level. Needless to say, many insurers have been reluctant to sell insurance to cannabis businesses for a variety of reasons, not the least of which is the chance that the selling of insurance might be considered an illegal monetary transaction.
The inability to procure insurance could make it too risky, if not impossible, for a cannabis business to operate. To address this problem, a bipartisan group of U.S. senators recently introduced the Clarifying Law Around Insurance of Marijuana Act (CLAIM Act), which is meant to prevent legitimate businesses from being cut off from the insurance market. Specifically, the legislation is designed to provide a legal safe harbor for insurance companies by easing the federal restrictions around selling insurance to businesses engaged in all stages of the cannabis industry, from the growers to the retailers.