State of the Insurance Market Report

2024 Initial Outlook:
Cannabis Insurance

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Market Updates

Gavel and marijuana.Cannabis is a complex market for insurance coverages due to the ongoing issue of being federally illegal. The directors and officers (D&O) market continued to soften in 2023, leading to more favorable terms and pricing in the cannabis space for both public and privately held companies. In contrast, cannabis businesses are experiencing steep premium increases and a lack of capacity in the property market due to catastrophe (CAT) losses. Business auto also continues to be challenging because of nuclear verdicts and higher repair costs.

In late August 2023, the Department of Health and Human Services (HHS) recommended that the Drug Enforcement Administration (DEA) downgrade cannabis’ classification. If approved, marijuana will be re-categorized from a Schedule I to a Schedule III drug — a lower-risk controlled substance.

The approval process could take months. Reclassification would be a game changer for the U.S. cannabis industry and for a number of ancillary businesses involved in the space, especially insurance.

Coverage Considerations

Risk Strategies predicts the DEA downgrade of cannabis will pave the way for the following:

  • Insurers not currently in the cannabis space may decide to enter the market. This could create capacity, giving cannabis businesses more choices for coverage.
  • More scientific research and studies will emerge. Insurers will use research results to inform policy language, underwriting decisions, and pricing.
  • Major credit card companies will return to, or take their first step, into being a part of industry payment processing.
Rate Forecast
Cannabis: Directors & Officers: -10% to Flat
Cannabis: All Other Lines: +5% to +15%

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.