CANNABIS INSURANCE
CONFLICTING RISKS :
The Increasing Demand For Cannabis Industry Insurance
T hings in the cannabis industry are rapidly changing . The fact that a cannabis industry even exists at all is a rapid change . Seemingly every day , a regulation changes or another state opts for legalization in one way or another . The demand for cannabis is also increasing . With over half of the states in the United States legalizing medical or recreational marijuana , the division is rapidly becoming an issue between state and federal governmental entities . That division makes it very difficult for businesses operating in the industry to find insurance coverage and to implement risk management plans .
One of the first aspects of the cannabis industry that has manifested in the last few years is an emerging standardization of business practices even amid the ever-changing regulatory landscape . Cannabis is an illegal substance , after all , under the Controlled Substances Act , which designates it as a Schedule I drug with no acceptable medical use . On the other hand , one of the provisions in the 2018 Farm Bill removed hemp from the list of Schedule I controlled substances and , thus , removed CBD as a controlled substance with respect to DEA enforcement .
In light of the divergence between local , state , and federal regulations within the cannabis industry , cannabis-related businesses ( CRBs ) face unique obstacles . CRBs will face the same issues as many other businesses when it comes to general liability and workers ’ compensation , but they also face risks that agricultural and even manufacturing businesses face during the course of their operations .
CRBs in particular face larger than average risks of the following :
• Fires from both wild and internal sources
• Theft
• General liability
• Product liability
• Cyber liability
Companies of all types , even in states which have legalized cannabis , still face banking restrictions due to federal regulations . Federally insured banks often do not want to be involved with these companies in large part due to their own risk management . With an estimated 70 % of CRBs operating as cash-only businesses with no formal banking relationships , it should come as no surprise that they face much higher risks of theft and liability due to the large amounts of cash that they carry .
With the passing of the Secure and Fair Enforcement Banking Act in April 2021 in the House of Representatives , CRBs would be able to access the products and services offered by financial institutions .
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