Reed Smith Client Alerts

Insurance for businesses in the U.S. cannabis industry is a must-have. Like businesses in any other industry, a cannabis-related business requires commercial general liability, property, directors and officers, professional liability, and other coverages. However, a cannabis-related business may not have access to the same number of insurers, the same selection of policies, or the same limits that other non-cannabis-related businesses do. One reason for that discrepancy is that cannabis remains illegal under U.S. federal law. However, pending federal legislation, if passed, would offer protection for insurers who want to do business with the cannabis industry in states and other U.S. jurisdictions where it is legal. A safe harbor for insurers should cause more insurers to enter the market, which, in turn, should result in more coverage options and potentially lower premiums for policyholders throughout the legal cannabis industry.

Authors: Zachary S. Roman


In early March 2019, U.S. Rep. Ed Perlmutter (DCO) introduced H.R. 1595, the Secure and Fair Enforcement Banking Act of 2019, also known as the SAFE Banking Act of 2019. The stated purpose of this legislation “is to increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.”

To that end, the Act provides a “safe harbor for depository institutions,” which would allow such institutions to provide “financial services to a cannabis-related legitimate business or service provider.”

U.S. Rep. Steve Stivers (ROH) recently introduced an amendment to the SAFE Banking Act of 2019 extending that safe harbor to insurers providing financial services to “cannabis-related legitimate businesses.”

On March 28, 2019, the U.S. House Financial Services Committee voted 45 to 15 in favor the SAFE Banking Act of 2019. The amendment introduced by Rep. Stivers was adopted by voice vote. The legislation now moves to the floor of the U.S. House of Representatives for consideration. As of April 11, the Act has 160 cosponsors.