A.M. Best recently released a report entitled, “Cannabis: New Opportunities for Insurers, But with Burgeoning Risks.” Among other findings, the report observed that, “despite growing demand from both [cannabis] producers and retailers alike, many [insurance] carriers are reluctant to embrace the industry, owing to its classification as a Schedule I drug in the eyes of the U.S. federal government.”
Today, 33 states as well as the District of Columbia legally allow the use of medical marijuana. Within that figure, 10 states and the District of Columbia have additionally legalized the use of recreational marijuana. The market for marijuana coverage is the largest it has ever been, and is likely to continue to grow. There are a number of market segments within the marijuana sector that require insurance coverage, some of which include dispensaries, retailers, cultivators, infused products, and landlords. In 2017, the recreational and medical marijuana industry produced $8 billion in sales, with this figure expected to rise to $22 billion by 2022.
Presently, approximately 25 carriers in the United States and Canada are offering coverage to businesses in the marijuana industry. These insurers offer basic policies such as commercial general liability, property liability, and product liability. If insurers can address the obstacles in insuring the cannabis industry (such as federal law, lower limits, non-stacking endorsements, and policies that often do not include duty to defend), this market can be a very valuable source of business.
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