Part of the reason why many in the insurance industry are hesitant to enter the world of cannabis is because of conflicting cannabis laws and regulatory influences. A few examples are listed below:

The Safe Banking Act is waiting at the Committee stage in the U.S. Congress. Designed to permit banks, insurers and credit unions to work with cannabis businesses, it is unlikely to move until a new president is elected.
The Federal Bank Secrecy Act requires financial institutions to report to the Treasury Department any transactions of $5,000-plus derived from illegal sources.
The McCarren-Ferguson Act states that federal law cannot pre-empt state law in the case of insurance, but it does not apply to the Money Laundering Statute. The Money Laundering Statute makes it a felony to engage in a financial transaction involving the proceeds of unlawful activity.

According to the report, there are only six large insurers currently offering cannabis coverage, and most insurers that are currently entering the market are offering a core set of policies that usually consist of the following:

Commercial and general liability with limits of $1 million per occurrence/$2 million aggregate
Property damage, with limits of $1 million per occurrence/$2 million aggregate
Product liability, with limits of $1 million per occurrence/$2 million aggregate

Although the biggest risk the cannabis industry faces is uncertainty, there also is concern about data. Both personal and commercial lines insurers need to study early claims in states where marijuana has been legalized to determine their risk appetite. But due to the inconsistency between states and the rapidity of changes in the industry, "it is almost impossible for insurers to access any kind of reliable data on the specific risks that exist within this industry."

Special Reports /

Despite budding cannabis market, insurance still lags behind

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