The New York State Department of Financial Services issued a circular letter last week to provide guidance to the insurance industry on cannabis-related criminal convictions and insurance underwriting.

Under New York state law, it is illegal for any person or entity to take any adverse action against individuals who may have been arrested or convicted of crimes in the past but had those crimes expunged from their record. In the circular letter, the department addresses how that existing law against discrimination applies to cannabis-related convictions considering the legalization of cannabis in the state in 2021.

An unlawful discriminatory practice

The guidance provided in the circular letter is clear: The department considers it to be an unlawful discriminatory practice to inquire about or act adversely based upon any arrest or conviction related to an expunged cannabis-related criminal conviction.

Under this guidance, insurers will be prohibited from denying an application for insurance, making a distinction in premiums or rates, making a distinction in the terms and conditions of insurance, or otherwise taking adverse underwriting actions based on a cannabis arrest or conviction.

What this means to agents

While this guidance is most relevant to insurance companies, the law applies to insurance agents as well.

Agents are encouraged to review their internal procedures and controls to ensure that they do not inquire about or act adversely based upon expunged cannabis-related convictions.