Only six large insurers in the United States are currently offering this type of coverage.
Despite the fact that 32 states have legalized medical and/or recreational marijuana use, it remains challenging to obtain cannabis business insurance for companies in this market.
There are a number of difficulties that are holding insurers back from selling this coverage.
Among the top hurdles in the way of cannabis business insurance is the fact that medical and recreational marijuana use remains illegal on a federal level. As a result, despite the fact that it may be legal within 32 states, this booming and rapidly growing industry has become a highly complex one.
Therefore, even though many companies in this industry have every opportunity to take off for substantial success, they struggle to find the property & casualty policies – among others – that they require to protect themselves as any business would.
The lack of cannabis business insurance options hasn’t stopped this market from rapid growth.
There may be quite a lot stuck in limbo when it comes to this industry’s operations, but it keeps growing in a very healthy way. In 2018, the U.S. legal marijuana market took off from zero to more than $10.4 billion. Moreover, about 250,000 people are employed to the handling of these plants, says Associated Press data. That figure doesn’t include the number of people who are employed by associated businesses such as those supplying the processing, packaging, payroll and transportation for the industry or the retailers actually selling it, according to a recent New Dawn Risk report.
That report examined the current and potential size of the market as well as the legalities and rulings that impact coverage in this industry, and the challenges faced by brokers and carriers, among others. It also underscored that since companies selling marijuana cannot access suppliers beyond their own states, “virtually all insurance for cannabis-related businesses is supplied at a local level by smaller state-based insurers.”
Still, cannabis business insurance – which is necessary to protect those companies against several risks specific to their industry as well as those that are typical of any business operation – remains widely unavailable.