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How The CLAIM Act Could Expand The Cannabis Industry's Insurance Options

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How The CLAIM Act Could Expand The Cannabis Industry's Insurance Options
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The Clarifying Law Around Insurance Marijuana (CLAIM) Act, aimed at improving insurance options for cannabis businesses, was introduced Monday in the U.S. House of Representatives. 

The Legislation

Introduced by Rep. Nydia Velázquez, a New York Democrat, and Rep. Steve Stivers, an Ohio Republican, the CLAIM Act would help cannabis businesses acquire insurance products by protecting insurers from federal prosecution when doing business with the cannabis industry.

“Without casualty, property and title insurance coverage, the growth of this industry will be impeded if not blocked entirely,” Velázquez said in a press release. 

The bill would also require studies on the hurdles for aspiring female and minority cannabis entrepreneurs. 

“As we normalize these products and this becomes a business, we must ensure minorities, women and other disadvantaged groups are able to enter this market and profit from this burgeoning industry,” Velázquez said. 

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'Now Is The Time To Get To The Next Stage'

Jeff Samuels heads up the cannabis and hemp insurance practice at Embroker. The CLAIM Act is a "big improvement" for cannabusinesses, he said. 

The industry does have insurance through non-admitted markets, otherwise known as wholesalers. 

“They’re basically an out-of-state carrier who has the ability to write more risk-centric, risk-prone programs where they are not tied to states laws,” Samuels said. 

Non-admitted markets also provided coverage and programs for markets like cryptocurrency and technology companies in their infancy, he said. 

With a wholesaler, if the carrier becomes insolvent, the state won’t back the entity, Samuels said. 

If the CLAIM Act passes, larger, publicly traded insurance providers could enter the market, possibly creating more competitive pricing and additional program flexibility for cannabis businesses, he said. 

While there are several "great" wholesalers in the market, "now is the time to get to the next stage with the CLAIM Act." the Embroker exec said. 

What’s Next

The measure was referred to the House Financial Services Committee; Velázquez is the committe's third-most senior member.

The Senate has similar legislation under consideration. 

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