For many years, marjuana use, both for recreational and medical purposes, has been controversial. It has been and still is federally illegal, while over the years public and medical opinions have changed. As opinions have changed many states have legalized or decriminalized, marijuana for medical or recreational purposes, or both. With the growth of state legalizations the industry of growing and selling marijuana has developed into a billion dollar industry, with legal sales totaling $19 billion in 2020 and expected to reach $41 billion by 2025.
On Friday, the House passed legislation that would finally remove marijuana from the federal list of controlled substances. The bill, H.R. 3617, is known as the Marijuana Opportunity Reinvestment and Expungement Act, or the MORE Act. But what exactly does this bill do? First, it removes marijuana from the list of scheduled substances under the Controlled Substances Act; currently marijuana is a Schedule I drug along with heroin, LSD, and others. Schedule I drugs are considered as having no currently acceptable medical use and having a high potential for abuse. Changing the status of cannabis from Schedule I to a lower schedule would allow scientists to study the effects of marijuana to determine what benefits, if any, it actually has.
If passed, the bill would mandate the replacement of all statutory references to the term marijuana with the term "cannabis," require the Bureau of Labor Statistics to publish data on cannabis businessowners and employees, establish a trust fund for services and programs for those in communities impacted by drug use, impose various taxes on cannabis products, allow the Small Business Administration loans and services available to cannabis-related businesses, and direct the Government Accountability Office to study the society impact of cannabis legalization.
It would also prohibit certain actions. It would prohibit the denial of federal public benefits and the denial of benefits and protections under immigrations laws based on cannabis-related conducts or convictions. It would also establish a process to expunge convictions and conduct sentencing reviews related to federal cannabis offenses.
While this move is certain to be widely celebrated by those supporting the legalization of cannabis, the Senate still has to act on the Bill and it may or may be approved. Let's say for the sake of the argument it does get passed and cannabis becomes legal. What does that mean for the insurance industry?
The Bill addresses legalization and sales of the product, taxes, and individuals with previous convictions. It does not address any of the issues covered by the Clarifying Law Around the Insurance of Marijuana (CLAIM Act) or the SAFE Banking Act. The CLAIM Act is designed to allow insurers to provide coverage for cannabis-related businesses without fear of penalty, and the SAFE Banking Act is designed to allow banks to handle funds and financial services to cannabis-related businesses.
However, federal decriminalization would make those Acts unnecessary; once decriminalized, insurers and banks would not have the concerns about dealing with funds from illegal businesses. The ability to accept such funds would make it easier for carriers to provide the necessary coverage to those businesses. While there are some specialty policies, most standard carriers are still excluding cannabis products and businesses, with exceptions for certain hemp products only. Giving carriers the leeway to deal with cannabis businesses the same way they deal with other businesses would allow for the development of coverages that address the needs particular to cannabis.