September 23, 2021 03:00 pm ETEstimated Read Time: 4 Minutes
Cannabis; it’s smoking hot right now. As the fight for legalization continues across the nation, more and more entrepreneurs are jumping for a spot in the flourishing industry. Current statistics from the Anthenum Collective show that more than 67% of Americans believe cannabis should be legal, and legal cannabis sales are expected to achieve a value of $73.6 billion by as early as 2027. According to Flow Hub, the U.S. cannabis industry is estimated to be worth $61 billion as of 2021.
Currently, if you want to get into one of the many facets of the legal cannabis sector—such as growing, testing facilities, commercial retail space, and processing facilities—options for insurance are very limited. While these businesses would benefit from being properly insured just like other businesses in America, they face the hurdle of current federal regulations against cannabis that label it a Schedule I controlled substance with no medical purpose and a high addiction rate.
Current Insurance Options Are Costly and Limited
Despite growing evidence that cannabinoid therapies hold promise for treating many conditions, current federal laws and the stigma driving them continue to make it difficult for cannabis businesses to find affordable insurance plans. Rocco Petrelli, the chairman of the National Cannabis Risk Management Association, was quoted telling media sources, “There is an overwhelming need for the right kinds of insurance.”
Cannabis, without question, is raking in hundreds of millions in tax dollars. The business that is fueling this economic boom should be allowed access to insurance like others, and many signs are pointing towards the federal legalization that could make it happen. One of those signs is insurers quietly prepping for a potential boom in cannabis sales estimated to be around $17.5 billion a year or more, should Congress end federal prohibition in some form in 2022 as the BDSA predicts.
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Trying to keep with the changing times and political tides, insurance providers are coming up with new types of insurance coverage. States that have legal access to medical and recreational cannabis often work with state-regulated insurers to obtain limited property and liability coverage. Should the federal government end cannabis prohibition, insurance companies would be able to offer coverage for cargo, crops, theft, and more.
Gavin Kogan is the CEO of Grupo Flor, a licensed manufacturer, distributor, and cultivator of cannabis with five dispensary locations in California. According to Kogan, he pays $85,000 to $100,000 annually to have $1 million of Directors and Officers (D&O) protection, citing the coverage to be super limited. When companies lack proper insurance, it can create a rise in operational costs as well as multiple other challenges.
Upcoming Cannabis Insurance Conference Will Assess the Landscape Ahead
Substantially increased profits await insurers who are set up to offer the necessary coverage for cannabis businesses at reasonable rates. On Oct. 14, the Insurance Journal’s third annual Insuring Cannabis Summit will take place, focusing on what’s next for those operating in the legal cannabis space and those working to provide insurance for it.
Potential federal cannabis legalization comes at a good time as innovative cannabis businesses pop up all over the country. One of the most anticipated at the moment is the 25,000-square-foot mega dispensary being proposed by the Mashantucket Pequot Tribe of Connecticut. Just imagine the type of insurance a business of that size could use.
Allowing cannabis companies access to proper insurance—just like alcohol, tobacco, and pharmaceutical companies—would change the landscape of the industry as we know it. Operational costs would drop, increasing financial security for businesses and savings for consumers. It would also pave the way for medical insurers to cover cannabis the way they do prescription drugs. With the right support—and ideally, the end of cannabis prohibition—we can see the cannabis industry reach its full potential.
Ashley Priest is a patient, mother, entrepreneur, and activist that fights to end prohibition globally for a better future for all. Ashley has a passion for sharing education pertaining to the goddess plant known as cannabis. She believes that a single seed can tip the scales and that together through education we can end the stigma that is preventing cannabis from flowering to its full potential globally.
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