Instant Insights / Marijuana and the Insurance Industry

Cannabis businesses face unique risks and challenges, and insurance slowly gaining its footing on how to properly insure this budding industry.


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Hemp producer farm. A producer can be issued a negligent violation if the THC concentration of the plant exceeds 0.5%. In determining whether a violation occurred, the interim rules state that a failed test from a distinct lot may invalidate the entire harvest. (Photo: Shutterstock)

On October 31, 2019, the United States Department of Agriculture (USDA) unveiled the interim final rule for its U.S. Domestic Hemp Production Program, and may now proceed with review and approval of state and tribal hemp plans. The release commenced a 60-day public comment period with an effective date scheduled for December 31, 2019, and the USDA will publish finalized rules within two years. Although hemp may continue to be cultivated pursuant to authority granted by the 2014 Farm Bill, that authority sunsets on October 31, 2020, one year after the publication of the interim rule.

Initial public reaction to the interim regulations has been generally pessimistic. Producers of hemp complain that the testing and compliance requirements are too strict and that if implemented the interim rule may stunt industry growth. In particular, many are concerned with the USDA’s definition of the 0.3% THC limit for legal hemp, restrictive testing methodologies under a new federal testing standard, and a new requirement that all testing labs be DEA-certified, which may result in inadequate testing capacity to meet demand.

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