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S. 862: Clarifying Law Around Insurance of Marijuana Act

As it becomes legal in more states but remains illegal on a federal level, should insurers get involved in the industry?


States have increasingly legalized recreational or at least medical marijuana, including such high-population states as California and New York, plus all five states where the issue was on the ballot in 2020.

However, the drug remains illegal on a federal level. While the House in 2020 passed the MORE Act to legalize marijuana, on a largely party line vote, it never received a vote in the then-Republican controlled Senate.

So far, the federal government has largely declined to prosecute marijuana businesses, use, or possession in states which have legalized it. In May, Attorney General Merrick Garland confirmed that position would continue under the Biden administration.

Nevertheless, institutions that may want to do business with state-legal marijuana companies, such as banks and insurers, remain wary. GovTrack Insider previously covered the Marijuana Business Access to Banking Act, which would clarify the legality of banking with state-legal marijuana businesses under federal law.

What the legislation does

The CLAIM (Clarifying Law Around Insurance of Marijuana) Act would ban criminal prosecution of insurers who work with state-legal marijuana businesses.

The House version was introduced on March 18 as H.R. 2068, by Rep. Nydia Velázquez (D-NY7). The Senate version was introduced the same day as S. 862, by Sen. Bob Menendez (D-NJ).

What supporters say

Supporters argue that a legal business shouldn’t be subject to additional economic obstacles as accidental holdovers from the “fully illegal” era.

“Insurers are reasonably reluctant to offer coverage to cannabis-based businesses, given the current discrepancies between federal and state law,” Rep. Velázquez said in a press release. “All the same, these promising new businesses are left extremely vulnerable to any flood or fire that may come along and destroy all they’ve worked to build with no safety net in place. This bill will establish a safe harbor for insurers working with these businesses, allowing them to legally operate in states that legalized marijuana without fear of repercussion.”

“It’s time for the federal government to take the shackles off of state-authorized cannabis businesses, allowing this burgeoning industry to thrive,” Sen. Menendez said in a separate press release. “Current federal law prevents these small business owners from getting insurance coverage, and without it, they can’t protect their property, employees or customers. Our legislation simply levels the playing field for legal cannabis businesses, allowing them to fully operate just as any other legal small business would by permitting insurance companies to provide coverage to these enterprises without risk of federal prosecution or other unintended consequences.”

What opponents say

Opponents counter that the legislation is a solution in search of a problem. As the National Law Review reported in a March article, “There has been no reported federal action taken to date against any insurance company or broker that works with state-compliant marijuana businesses.

Odds of passage

A prior 2019 House version also introduced by Democratic Rep. Velázquez attracted one cosponsor across the aisle, Rep. Steve Stivers (R-OH15). It never received a vote in the House Financial Services Committee. The current version had also attracted that same one cosponsor, although Rep. Stivers left the House in May. It awaits a potential vote in the same committee.

A prior 2019 Senate version attracted three bipartisan cosponsors, two Republicans and one Democrat. It never received a vote in the Senate Banking, Housing, and Urban Affairs Committee. The current version has also attracted the same two Republicans and one Democratic cosponsor and awaits a potential vote in the same committee.

Last updated May 25, 2021. View all GovTrack summaries.

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Mar 18, 2021.

Clarifying Law Around Insurance of Marijuana Act or the CLAIM Act

This bill generally provides a safe harbor from penalties or other adverse agency action for insurance companies that provide services to cannabis-related legitimate businesses in jurisdictions where such activity is legal.

The Government Accountability Office must report on barriers to marketplace entry for minority-owned and women-owned cannabis-related businesses.