California Enacts Legal Protections for Cannabis Insurance Providers

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Summary

AB 2568 clarifies that writing insurance for commercial cannabis does not constitute a crime, since cannabis is part of a legal, regulated market in California. It is important that commercial cannabis businesses have multiple options for insurance as they pursue licensure. Attain Specialty Insurance Company (2016), which established that federal classification of cannabis is not relevant in an insurance provider’s determination to write an insurance policy. Though the California Civil Code was amended in 2018 to clarify that cannabis is the legal object of a contract, and it has been tacitly understood that insurance contracts are legal in California, the intent of this new law is to remove any uncertainty and to encourage further growth of admitted insurance products for California cannabis businesses. It concluded: “This bill expressly states a protection under California Law for CDI licensees.

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September 28, 2022

Author: Ian A. Stewart

Several cannabis-related bills were signed by California Governor Gavin Newsom on September 18, 2022, including Assembly Bill 2568 (AB 2568), which clarifies that it is not a crime for individuals and firms licensed by the California Department of Insurance (CDI) to provide insurance or related services to persons licensed to engage in commercial cannabis activities. Though the California Civil Code was amended in 2018 to clarify that cannabis is the legal object of a contract, and it has been tacitly...

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