As the federal government continues to drag their feet with the legalization of marijuana, the insurance industry is carefully watching the situation. At this time, the laws prevent major, nationwide insurance companies from fully offering their services to the cannabis businesses. However, as the federal government slowly changes, the insurance industry might find a chance to get in with this already very profitable industry.

Reasons

The reason that the insurance companies are chomping at the bit is thanks to an estimate that Reuters released in August. They reported that the cannabis industry is already making $17.6 billion a year. This is expected to increase ten-fold once the federal government legalizes cannabis.

Exceptions

Readers should note that it is not accurate that cannabis companies cannot get insurance policies. For example, cannabis farmers, despite being the source of the products for this industry, lack this protection. Since insurance is state-regulated, some smaller insurers or what are called “boutique” companies can give policies to some cannabis farmers.

Because certain states have restrictions, the nationwide insurance companies are not, at this time, typically willing to insure these farmers. This is because they would have to make multiple versions of their policies. There are some companies, like Progressive, that offer some limited coverage. For example, Progressive offers coverage for commercial vehicles that transport cannabis in marijuana-legal states, but they cannot insure the cargo.

In fact, because many insurance companies have trouble insuring the cargo, it results in logistic problems. This is because some farmers split up deliveries into multiple loads. Farmers do this in order to lower the value of each in case of theft.

Current Issues

The main issue that comes from these limitations is the costs that come from the coverage.  According to Green Entrepreneur, because the laws limit the insurance market, they charge high costs. The resulting premiums are 20 or 30 percent higher than other industries. Some have even reported that they have to pay premiums for vehicle insurance four or five times higher than other industries.

Another Reason

These limitations toward protecting certain groups’ living is another reason why many hope that the federal government’s stance towards the cannabis industry will change for the better. It is their hope that when the federal laws change, these farmers, and others, like dispensaries, will finally have some protection around their products.

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