In almost any business in the U.S., the risk of loss or lawsuit is covered by private insurance companies. Yet in the marijuana industry, private insurance is extremely difficult and expensive to access. There are few plans available and while some businesses want insurance, others are hesitant to pay the high price or give up their personal information. While some states like California are attempting to make insurance easier for businesses to access, problems will remain until marijuana is legal on the federal level.
While some uncertainty is unavoidable in insuring a new, heavily regulated industry, insurance for marijuana businesses is burdened by the conflict between state and federal law. The current regulatory landscape has resulted in business owners who are hesitant to purchase insurance and few companies willing to provide insurance. The best path forward for marijuana business insurance is the legalization of marijuana on the federal level. In Canada, where marijuana is legal, big insurance companies such as The Lloyds Market have announced plans for cannabis businesses. Anthony-Rivera points out that a banking solution for the marijuana industry would also be beneficial for business owners.
In the meantime, there are unique challenges to insuring the marijuana industry such as fire hazards and uncertainty in product liability. The market has already made some progress addressing these problems with the growth of cannabis-focused insurance companies and brokers. Until a more complete market develops, however, regulations with certain insurance requirements may keep many entrepreneurs from entering the industry.
Full Policy Brief — Marijuana Business Insurance: Another Hurdle For Entrepreneurs