Balancing Big Risks and Big Rewards A maturing cannabis industry has the potential for enormous growth — but only if growers, processors and retailers can minimize threats to their profitability and stability
Cannabis & Hemp Insurance Specialty Team
HUB International Limited 5 Bryant Park New York,NY10018
The U.S. cannabis industry hit a record $24 billion in sales in 2021, with expected annual sales of $70 billion by 2028.1 Cannabis risks have always outpaced the availability of insurance, in large part because of its status as a federally outlawed substance and the dangers in extraction and production. But it now shares many of the same risks as other industries — catastrophic crop damage, cyber risk and a shortage of skilled workers. Some relief for the industry’s financial issues may be ahead: The SAFE and CLAIM Acts, if passed, carry with them the potential to bring traditional financial resources to cannabis operations. Insurance for cannabis businesses remains expensive. Cyber coverage is expected to rise 30% or more, as cyber risks explode and more businesses seek coverage. Executive liability policies including Employment Practices Liability (EPL) and Directors & Officers (D&O) premiums are expected to increase 10% to 20%. Cannabis Property-Casualty coverage is also expected to rise 10% to 20%, except for businesses in catastrophe-prone areas, which will see increases of 20% and up. These factors of additional risks and higher insurance premiums won’t inhibit industry growth, but those cannabis businesses that invest in risk management will be the ones to benefit the most.