New bipartisan Congressional legislation is looking to create a safe space for insurance providers to do business with marijuana companies.
A new proposed bill in Congress will seek to offer insurance to players in the marijuana industry.
The bill, called the Clarifying Law Around Insurance Marijuana (CLAIM) Act, was introduced on Monday (July 29) and sponsored by representatives Nydia M. Velázquez (D-NY) and Steve Stivers (R-OH).
The bipartisan CLAIM Act would create a federal safe pass so insurers can engage the marijuana industry, despite the federal illegality of operations related to the plant.
“Without this legislation, insurers will understandably be reticent to insure businesses operating in the cannabis sector,” Velázquez said in an announcement. “This means a legal cannabis distributor whose product is ruined from a flood or fire could lose all their capital and their livelihood.
Due to the federal rules surrounding the marijuana industry, operators must carry on business operations without any insurance for their crops and land.
When we talk about our #cannabis sector, it is time we talk about #insurance products to prevent legal distributors from losing all their capital & livelihood in a flood/fire. That’s why I’m proud to introduce the #CLAIMAct to help our #businesses obtain insurance products. pic.twitter.com/zcnzc47NiW
— Rep. Nydia Velazquez (@NydiaVelazquez) July 29, 2019
Despite the rush in legal cannabis programs at the state level, marijuana businesses face a slew of challenges from the lack of federal clarity.
A variety of proposed bills have appeared that would offer relief to the marijuana industry either via banking or insurance options, since the drug remains illegal in the eyes of the federal government.
In March, the House Financial Services Committee voted in favor of the Secure and Fair Enforcement Banking Act of 2019, otherwise known as the SAFE Banking Act. After being introduced and recommended by the Congressional committee, the bill awaits activity from the Senate.
On July 23, the Senate Banking Committee held a hearing, “Challenges for Cannabis and Banking: Outside Perspectives,” and listened to testimony on the needs of the cannabis industry.
The bill from Velázquez would also look to create a brand new study from the Government Accountability Office about the challenges women and minority entrepreneurs face when trying to enter the industry.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.