Why Are Big Insurance Companies Pushing for the SAFE Banking Act?

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Cannabis Wire has continued to dive into the support behind the Secure and Fair Enforcement Banking Act of 2019 and found that, in addition to several mainstream banking institutions, the bill has a broad coalition of backers, including the State of Colorado, the National Beer Wholesalers,  The Real Estate Roundtable, and Brink’s Security Company.

The bill, commonly referred to as the SAFE Banking Act, would provide banks and federally-regulated creditors with ties to state-legal cannabis businesses with legal protection from prosecution. As the following lobbying disclosures indicate, a number of large insurance companies and industry associations have also contributed support (in addition to Prudential and Nationwide, which were named in our banking piece):

Why? The American Land Title Association, a group representing some 5,500 insurance companies, agents, and real estate attorneys, provides some insight. According to Vice President of Policy Justin Ailes, the association’s members “support efforts to clarify compliance under state and federal laws” because of the risk handling money in a real estate transaction represents.

“If a U.S. attorney wanted to make an example,” Ailes told Cannabis Wire, “then they could prosecute everyone who touched the money. It’s easy to identify who the settlement officer was facilitating the transaction.”

“Because of this risk,” he added, “ALTA has worked closely with sponsors Reps. Ed Perlmutter over the last year to broaden the SAFE Act to protect insurance companies and settlement providers. This includes securing a provision that protects service providers of cannabis businesses, including title and settlement companies, and insulating the proceeds of cannabis businesses from criminal or civil forfeiture.”

Jonathan Bergner, Assistant Vice President of Federal Affairs at the National Association of Mutual Insurance Companies, told Cannabis Wire that the insurance industry is grappling with risks associated with federal illegality.

“Claims involving cannabis are being filed and in some cases, insurers are being compelled to do business with various elements of the cannabis supply chain,” Bergner said. “As long as this conflict between the states and the federal government on marijuana exists,” he added, the association “firmly believes that a robust safe harbor is needed to ensure that insurers are not improperly exposed to criminal or civil liability under federal law.”

Susan Henderson told Cannabis Wire that the Wholesale & Specialty Insurance Association supports the SAFE ACT “not because we are advocating for legislation to legalize cannabis, but because we want to ensure that where states have made cannabis activity legal that our members are able to provide insurance coverage for those businesses if (1) they elect to and (2) in a manner consistent with other business activities in the individual states where coverage is allowed—and required.”

Joel Kopperud, a spokesperson for the Council of Insurance Agents and Brokers, added that insurance brokers, like everyone else in the U.S., see the “exploding” cannabis market. “We’re doing all we can to help the insurance market for cannabis operations mature, so that these businesses have access to a competitive market for all of their commercial insurance needs,” whether that’s crop insurance, directors and officers liability insurance, business interruption insurance, or some other kind of property, casualty, or commercial coverage.

If the SAFE Act passes, Kopperud said, insurance companies “can serve those clients in states where it is legal without fear of getting sideways with a conflicting law elsewhere.”

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