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What's New: Advocacy

The NAIC is Addressing Bonding and Insurance for Marijuana-Related Businesses.

Tuesday, October 23, 2018  
The National Association of Insurance Commissioners (NAIC) is preparing a white paper to assist states with insurance and bonding issues for persons and entities involved in the marijuana business in states that have legalized it. State regulators released their compilation of the numbers of admitted or surplus lines insurers that will write various coverages for marijuana-related entities. Based on their recent conference call, it appears that the insurance regulators believe that they need to match the businesses with the insurers writing the coverage to resolve any insurance issues or let the surplus lines write the business. The problem, however, is the cannabis still is a controlled substance under federal law and sureties cannot deposit premiums and banks cannot accept proceeds from illegal activities. Sureties would be willing to write the license and sales tax bonds that have been enacted but cannot because of the threat of federal prosecution. SFAA is working with the American Bankers Association in Congress to address the conflict between state and federal law. SFAA’s Government Affairs Advisory Committee will meet this week to strategize on assuring that the surety bond issues are adequately addressed in the NAIC’s guidance to the states. To date, 31 states have legalized medicinal marijuana and nine states also legalized recreational use.

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