Cannabis businesses continue to rely heavily on non-admitted insurers, and available limits often fall below the requirements of larger operators. A renewed congressional effort seeks to remove a federal legal barrier that has discouraged broader insurer participation in the sector.
Representatives Nydia Velázquez, D-N.Y., and Warren Davidson, R-Ohio, reintroduced the Clarifying Law Around Insurance of Marijuana Act, or CLAIM Act, on September 16.
The legislation would shield insurers from certain federal criminal penalties when they serve cannabis businesses operating legally under applicable state law. Agents and brokers would receive related protection from civil liability.
The bill arrives as cannabis insurance capacity remains uneven across the US. The National Association of Insurance Commissioners says most commercial insurance for cannabis-related businesses still sits in the non-admitted market, leaving fewer standard-market options for many operators.
Coverage gaps remain more pronounced among smaller businesses and newer cannabis-related activities. NAIC research identifies limited availability for ancillary services and cannabis-infused products, with social consumption businesses facing similar problems.
Limits present another constraint. Insurers commonly provide $1 mn per occurrence and $2 mn aggregate across commercial general liability policies, according to the NAIC. Similar capacity issues affect property and product liability coverage, while some cannabis operators require limits of $5 mn to $10 mn or higher.
The CLAIM Act would address federal legal exposure rather than underwriting appetite itself. It wouldn’t require insurers to accept cannabis risks, change policy terms or expand available limits. Instead, the legislation would prevent federal authorities from imposing certain consequences solely because an insurer provides services to a qualifying cannabis business.
Under the proposal, federal agencies wouldn’t be permitted to prohibit or penalize an insurer for covering an eligible cannabis company solely because of its cannabis activity.
Regulators also wouldn’t be permitted to pressure carriers to cancel coverage or reduce protection for the same reason.
Velázquez said the continuing conflict between federal and state cannabis law has discouraged insurers from serving businesses that operate legally within their states. She argued that the resulting shortage of insurance leaves companies exposed to losses from events such as fires or severe weather without the same coverage options available to other legal businesses.
A Senate version of the CLAIM Act was introduced in July by Sens. Kevin Cramer, R-N.D., and Ruben Gallego, D-Ariz. The House proposal therefore enters Congress alongside a separate Senate effort addressing the same federal insurance issue.
Federal protection would remove only one obstacle facing the cannabis insurance market. Underwriters still need to price exposures associated with fire and theft, while crop losses create a separate risk problem.
Workplace injury exposures remain part of the underwriting equation, and product liability claims add another source of potential loss.
Policy language also requires sector-specific treatment because cannabis businesses operate under different state regulatory structures. Those underwriting issues would continue affecting insurer appetite and available capacity even if Congress passes the CLAIM Act.
Specialty insurers are already adding higher limits for larger cannabis businesses. Conifer Insurance Services introduced Cannabis Select, a non-admitted program offering property limits of up to $25 mn for qualifying dispensaries and other cannabis operations.
The program also provides up to $5 mn per occurrence for general and product liability. Conifer developed the offering for larger operators requiring more capacity than its Cannabis Essentials program, which provides property limits of up to $5 mn and liability limits of $1 mn per occurrence with a $2 mn aggregate.
Insurance brokers are expanding their cannabis operations as well. In August, Aon-owned NFP acquired the retail cannabis insurance business of Frontier Risk Group, bringing a specialist team focused on insurance placement and risk management into NFP.
Frontier Risk had built the business around coverage placement for cannabis companies operating within a complex regulatory environment. Following the transaction, members of its retail cannabis team joined NFP, while Frontier Risk shifted attention toward its separate specialty program operation.
Insurance trade associations have also supported federal protections for carriers serving legal cannabis businesses. Groups backing CLAIM Act proposals have included the American Property Casualty Insurance Association and the Council of Insurance Agents & Brokers.
- The Independent Insurance Agents & Brokers of America has supported the legislation as well, alongside the National Association of Mutual Insurance Companies.
- The Wholesale & Specialty Insurance Association is among the industry organizations that have backed federal measures designed to remove insurance-related barriers for state-legal cannabis businesses.
For insurers, passage of the CLAIM Act would remove one source of federal legal uncertainty without changing the risk characteristics of cannabis operations. Carrier decisions would still depend on loss experience, policy structure and available reinsurance, while larger businesses would continue seeking limits above those commonly available in today’s market.
