Key Congressional Committee Approves Safe Harbor for Medical Marijuana Payments

Nancy Grover

Washington, DC ( – A dilemma for insurers and self-insured employers about whether and how to pay for medical marijuana may be resolved soon. The industry-important House Financial Services Committee Thursday passed legislation that would give banks —and insurers — safe harbor for cannabis transactions.

H.R. 1595, the Secure and Fair Enforcement Banking Act of 2019, was introduced by Rep. Ed Peerlmutter, D-Colo. The bill ensures access to financial services for cannabis-related legitimate businesses and service providers and includes an amendment from Republican Rep. Stivers of Ohio.

“This week’s markup ultimately made the SAFE Banking Act a stronger bill, including my amendment to give safe harbor to insurers. These entities should not be penalized for their involvement with other legal businesses,” Stivers said. “Overall, this isn’t a bill about condoning marijuana use, it’s about ensuring businesses are not forced to operate in cash and open themselves up to risk, and I believe the improvements made reflect that goal. I want to thank Mr. Perlmutter, as well as Mr. Heck and Mr. Davidson for their leadership on this issue.”

For workers’ Compensation payers, that could address the question of how to pay for a drug that, while legal in a state, is still illegal under federal law.

“It eases a lot of the concerns the insurance industry and the financial sectors have over this ongoing dichotomy between federal and state laws,” said attorney Albert B. Randall Jr, principal with Maryland-based Franklin & Prokopik, P.C. “The fact that it’s still illegal on the federal level gives employers and insurers concerns about whether or not they can make payments, whether they can pay for medical marijuana … and that’s why we’ve seen in the states that have awarded medical marijuana to claimants the language is such that it’s typically ‘reimbursement’ of an injured worker’s purchase. The state courts, while they find the state law allows for a marijuana remedy, they are still seemingly mindful of the illegality of federal law to the point they are not requiring insurers to make direct payments to providers” or injured workers.

The conflict between federal and some state laws prompted several insurance industry trade associations to urge Committee members to pass the legislation. A letter addressed to Reps Perlmutter and Stivers expressed appreciation for “seeking needed clarity” on the issue.

“Congressman Stivers’ amendment would include insurers in the safe harbor provisions of H.R. 1595 and is an important recognition of the dilemma faced by our industry because of the differing legal treatment of cannabis under federal and state law and regulation at the state level,” the letter read. “This amendment will prevent criminal prosecution of insurers engaged in the business of insurance with cannabis-related legitimate businesses. It also will prevent civil liability for agents, brokers, and insurers, their officers, directors or employees for the same. It is an important step toward legal certainty for our industry.”

The letter was jointly sent by the American Land Title Association, the American Property Casualty Insurance Association, The Council of Insurance Agents & Brokers, Independent Insurance Agents & Brokers of America, Reinsurance Association of America and Wholesale & Specialty Insurance Association.

The bill passed on a vote of 45 to 156 and now goes to the House floor.“The SAFE Banking Act has a long way to go before it becomes law. But it has the potential to transform insurers’ ability to ease access to cannabis-based treatment when recommended by an injured worker’s physician,” said Sandy Shtab, AVP of Advocacy & Compliance for Healthesystems. “It won’t be long before dispensaries can accept credit cards or perhaps even direct payments from carriers instead of the current cash outlay that injured workers must make today.”

Passage by the committee comes as more states are adopting medical and/or recreational marijuana laws, along with an increasing number of court cases mandating reimbursement to injured workers whose providers recommend medical marijuana. Maryland is considering legislation that would make it the first state to legislatively mandate that workers’ compensation payers fund medical marijuana. That bill passed the state Senate unanimously and went to a House hearing earlier this week.

“What’s interesting about both the relationship with the Maryland bill and the federal bill is you’re starting to see much more bipartisan support for this type of legislation than we’ve seen,” Randall said. “”I think it’s a strong signal that the end of marijuana being illegal on the federal level is probably coming sooner rather than later.”

While the legislation could ease some of the legal tension surrounding medical marijuana, there are still clinical concerns. For example, a recent study out of Colorado and several reports from Canadian emergency rooms point to physical problems associated with chronic marijuana use.

“While we continue to regulate and legalize various forms of marijuana in the USA, we have got be ever mindful that these products are not without risk,” said Teresa Bartlett, M.D., SVP Medical Officer at Sedgwick. “The movement of legalizing banking for this industry certainly will provide a safer environment than an all cash business. As an industry we need to have our eyes wide open of all the consequences associated with marijuana use.”

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