Industry Issues | Surplus Lines Reform

Marijuana (Cannabis): NAIC CIPR webinar - Weeding through the Unique Insurance Needs of the Cannabis Industry

Emerging Risk - Marijuana/Cannabis Industry

The NAIC Center for Insurance Policy and Research (CIPR) recently held a webinar, Weeding through the Unique Insurance Needs of the Cannabis Industry. The webinar, was hosted by California Insurance Commissioner Dave Jones.

The cannabis industry continues to expand as more states legalize its use for medical and recreational purposes. Marijuana is now legal for adult recreational use in nine states and Washington, D.C. Medical marijuana is legal in 29 states. This emerging sector brings a host of unique needs and complex risks to be insured. However, uncertain legal status, lack of standardized business practices and data needs challenge insurers' abilities to provide comprehensive insurance coverages.

The recorded webinar explored cannabis industry activities, its risks and how its first and third party coverage needs are unique from other industries. This included how conflicting state and federal laws are impacting claims, the impact of policy exclusions, and gaps in available coverage.

Commissioner Jones highlighted how important the surplus lines market has been to providing insurance coverage to this emerging industry. Further, he noted the efforts of his office to ensure that other state agencies that regulate cannabis business do not create rules and requirements that would unduly preclude access to surplus lines insurance coverage, especially in cases where such admitted insurance products are not yet available. Lastly, the Commissioner reported that the CDI has found that while cannabis business and related commercial activity has some unique aspects, the department found no reason to seek any new or amended provisions to the state insurance code.

A roundtable discussion followed on the future of the cannabis market and the impact of emerging trends, including potential changes to or enforcement of federal rules and laws applicable to the financial services sector.

Weeding through the Unique Insurance Needs of the Cannabis Industry