S. 5049: Clarifying Law Around Insurance of Marijuana Act

This bill would create a federal safe harbor for insurance companies that provide coverage or other insurance services to cannabis-related businesses that are operating legally under state, local, or tribal law.

What changes for insurers

Under the bill, a federal agency could not:

• prohibit, punish, or discourage an insurer from doing business with a legal cannabis-related business;
• cancel, limit, or terminate an insurer’s policies solely because the insurer works with legal cannabis businesses;
• pressure insurers to avoid covering cannabis businesses, or downgrade/cancel coverage, just because the policyholder is a cannabis business owner, employee, or operator;
• take adverse supervisory action against an insurer solely because it covers, insures, or leases property or equipment to a cannabis-related legitimate business.

Federal legal protection

The bill would also say that, in states, localities, or tribal lands where cannabis activity is allowed by law, insurers and their officers, directors, and employees could not be held liable under federal law or regulation solely for:

• providing insurance services connected to legal cannabis businesses; or
• reinvesting income earned from that insurance business.

What the bill does not do

• It would not require any insurer to cover cannabis-related businesses.
• It would not change state insurance regulation rules generally.
• It would not override the McCarran-Ferguson Act or the Dodd-Frank Act.

Other provisions

The bill would direct the Government Accountability Office (GAO) to study barriers faced by minority-owned and women-owned cannabis businesses, including obstacles in licensing and access to financial services. GAO would have to report its findings to Congress, along with any recommendations for reducing those barriers.

Relevant Companies

• AIG — A large insurer that could potentially expand or clarify coverage offerings for cannabis-related businesses if federal uncertainty is reduced.
• CB — A major commercial insurer that may be affected by changes in the federal treatment of insurance for cannabis-related clients.
• TRV — A property and casualty insurer that could see direct effects if it chooses to underwrite cannabis-related risks in legal markets.
• WRB — An insurer with commercial lines exposure that could be impacted by expanded clarity around insuring cannabis businesses.
• LNC — A financial services and insurance company that could be affected if the bill changes how insurers can serve cannabis-related businesses.