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Editorial: Clarity needed on cannabis coverage

Posted On: May. 4, 2021 12:00 AM CST

Gavin Souter

It’s taken Congress a long time to get realistic about cannabis, but there are signs that it is edging closer to a practical approach to dealing with the use of the drug.

Like it or not, cannabis is increasingly viewed as a useful alternative medication by many state legislatures and as an acceptable social drug by some.

There are plenty of arguments to be had over its efficacy for treating chronic pain, glaucoma, epilepsy or any other condition cannabis is cited as relieving, and there remain legitimate concerns over side effects related to its recreational use, but the already widespread use of the drug means that a legal and regulatory framework that reflects the real world is required.

According to the U.S. drug schedule, cannabis remains a Schedule I drug, alongside the likes of heroin, ecstasy and LSD, and ahead of Schedule II drugs such as cocaine and methamphetamine. You don’t have be a connoisseur of any of these drugs to spot the odd one out.

The continued classification of cannabis as an illegal drug at the federal level has produced well-documented frustrations in the insurance market. While some insurers see minimal risk of incurring federal penalties for insuring participants in the cannabis trade, many others are much more risk-averse and unwilling to cover the industry even though cannabis use is legal in most states.

If insurance is the lubricant that ensures the smooth running of commerce, then it’s not surprising that in the absence of coverage some cannabis businesses are having trouble cranking up operations, if not completely seizing up.

But help may be on the way. As we report here, bipartisan legislation has been introduced in both chambers of Congress that specifically targets insurance coverage for cannabis companies. Similar legislation has failed in the past, but there is a sense that this time it could get through.

The Clarifying Law Around Insurance of Marijuana Act of 2021 does not try to be a panacea for the commercial cannabis sector. Instead, it focuses specifically on insurance and the reality of the differences in state and federal law. By providing a safe harbor for insurers that cover state-sanctioned cannabis companies and associated businesses, the measure would fix the insurance problem without trying to radically change federal drug regulation.

The CLAIM Act is a commonsense approach to the issue of ensuring that cannabis industry liabilities are covered and claims are paid.

The country is amid what’s already been a lengthy journey to legalizing cannabis and regardless of whether it decides to reverse course and reinforce the criminalization of the drug or go full speed ahead and allow its use and distribution nationwide, insurance needs to be in place while the ride continues.