Headline statistics include:
- In 2018 sales of medical and recreational cannabis in the U.S. were nearly nine times higher than sales of Oreo cookies.
- The legal US cannabis industry would pay about $1 billion in annual premiums were it insured to levels normal for other businesses.
- In 2018 the US market saw an estimated $8 billion in legalized cannabis sales. This could rise to over $40 billion by 2025.
The report also looks at the challenging legal environment for insurers, discusses possible coverage solutions and analyses the issues for each category of insurance cover, including: D&O, cyber, product liability, workers compensation, cash and contents insurance, crop insurance and fleet auto and cargo.
Max Carter, CEO of New Dawn Risk, commented: “Legal cannabis is a rapidly growing market, currently with a legal foothold in over thirty US states. Right now, the COVID-19 outbreak has led to increased demand for cannabis in the US and stores in many states have been allowed to reopen or offer curbside sales. However, the crisis has also exposed the financial pressures on many cannabis firms, with many VC-backed cannabis firms struggling already to meet financial projections. A COVID-19 recession, which seems all but a certainty, will only increase such financial pressures for young cannabis businesses.
“The pandemic will make it even tougher for cannabis producers to obtain insurance as providers further tighten terms and conditions and introduce exclusions, while insurers who may have been looking to enter the marker will put their plans on hold. With the Federal Government shut down and the possibility of a change of administration in November’s presidential election, the progress of legislation that would open up the cannabis market to insurers will be delayed.
“This reality fails to reflect the fact that many firms have significant insurance needs that are critical to help them manage the risks that exist in this young industry, with its untried legal and societal framework.
“Despite all this, the growth of the sector is inexorable and New Dawn Risk is committed to working with carriers and clients to share knowledge and insights to help identify and deliver creative solutions for this market. In just one example, we have already successfully placed cyber cover for a number of cannabis businesses. But we want to do more. And that means furthering the discussion, which is where we hope this report can contribute.”
Download the white paper here.