Last week, in an exciting moment, the U.S. House of Representatives, voted 321 to 103 in favor of H.R.1595, the Secure and Fair Enforcement Banking Act of 2019 (“SAFE Banking Act”). If enacted into law, the SAFE Banking Act, would provide financial institutions, including insurers, a safe harbor to do business with “cannabis-related legitimate businesses” in the United States. In particular, the act would protect insurers, independent agents, and brokers from criminal and civil liability when offering insurance coverage to state-legalized cannabis businesses. The SAFE Banking Act would grant the cannabis business community access to many of the financial services most companies take for granted, like electronic payment processing, employer-sponsored 401(k) accounts and small business loans.
With almost all Democrats and approximately half of the Republicans voting for the SAFE Banking Act, insurers hope that the stage is set for the bill to pass in the Senate and make its way to the President for signing.
The cultivation, possession, and distribution of marijuana are illegal under current federal law, despite 33 states permitting medical marijuana use in some capacity, and at least 11 states and the District of Columbia now allowing the recreational sale and use of marijuana. Both policyholders and insurers would greatly benefit from legislation that would open the door to a safe harbor and robust insurance market with more options, increased competition, higher limits, and lower premiums.
Hunton Andrews Kurth’s Insurance Recovery Group will continue to monitor and report on the SAFE Banking Act and other important legislation affecting the cannabis and insurance industries.