3 Biggest Concerns for the Cannabis Insurance Industry
With the rapid growth of the cannabis industry over the last several years, the U.S. economy has seen a significant impact that ranges into the billions. For example, in 2018, cannabis sales reportedly reached $10.4 billion and this amount is projected to double by 2022. In addition to the influx of cash from the industry is the addition of new jobs. In fact, one of the fastest-growing job markets in the country comes from the cannabis industry. These factors, along with other growth issues, makes the cannabis insurance industry a top industry to watch. However, with these immense and rapid successes comes the potential for insurance claims, and as the industry is still in its infancy, navigating these risks is novel.
Federal Laws Impacting the Cannabis Insurance Industry
Even though 33 states have passed laws legalizing medical marijuana, the federal government has not caught up to public demand. Marijuana is still considered a Schedule I drug, right along with heroin and cocaine. This makes it difficult for businesses that deal with the cannabis supply train to balance their involvement with banks. Currently, most banks are hesitant to deal with the cannabis industry due to federal guidelines that may negatively impact their banks.
However, the federal government seems to be catching up with the times. On September 25, 2019, the House of Representatives passed a law protecting banks who deal with the cannabis industry. While this law still needs to pass in the Senate and be signed by the President, it looks like the government is catching up to the rest of the country’s acceptance and utilization of marijuana.
Security and Crime Prevention
Until banks fully embrace the cannabis industry, many businesses are left dealing in high volumes of cash. This large amount of cash exposes them to a higher potential for crime. Employees and patrons of these stores are also at higher risk due to the banking industry and federal government’s slow reaction to legalize all parts of the cannabis industry.
Providing insurance for these companies can become expensive to the business owners who are diligent and want to cover their buildings, workers, and clients. Thorough insurance agents should discuss a number of different coverage options for these businesses, including Assault & Battery coverage to address these specific exposures.
Supply Chain Coverage Concerns
There are specific risks and needs throughout the cannabis supply chain. From seed to sale, coverage options are numerous and different for each level of the cannabis and hemp industry. Agents should consider the type and level of cannabis-related account and offer coverage to such levels including:
- Testing Labs
There is an opportunity to build a network throughout the cannabis industry that covers all different levels. Insurance agents should consider all levels of concern for each segment of the cannabis industry. With the continued growth of this industry, there is going to be a need for many different types and levels of insurance coverage.
Manufacturer’s Cannabis Insurance Considerations
For manufacturers in the cannabis industry, there are specific insurance needs related to edible or ingestible products such as baked goods, oils, candies, shatters, and other edibles. Individual state regulations pertaining to commercial kitchens and approved facilities at the state level are different for every state and should be taken into consideration.