U.S. Legal Cannabis Sales Hit Record $17.5B as Legislation Transforms Insurance Outlook

A new report highlights the opportunity for insurers in cannabis.

New Dawn Risk launched its latest white paper on insurance for the U.S. legal cannabis, CBD and hemp markets. The 2021 report is called “Opportunity knocks at last in the US cannabis insurance market.”

Since the publication of the previous report in 2020, U.S. sales of medical and recreational cannabis have grown exponentially, reaching $17.5 billion in 2020, a 46% increase from 2019. In addition, the legislative landscape in the U.S. has been transformed by the arrival of the pro-cannabis Biden presidency, supported by a Democratic majority in both Houses.

A new CLAIM (Clarifying Law Around Insurance of Marijuana) Act has been introduced to the Senate, alongside the parallel SAFE Banking Act. This will pave the way for insurers to work with the cannabis industry legally; and will also reduce some of the insurance risks that previously dogged the industry. For example, directors and officers coverage will become a legally available option, and marijuana businesses will be able to regularize their banking and cash operations.

The white paper examines the key drivers of growth whilst exposing both the potential premiums and the size of the insurance gap for the cannabis industry in the US. Key points include:

• 36 U.S. states, and Washington D.C., have now legalized cannabis for medical or recreational use.
• Americans now spend almost as much on legal marijuana products as they do on Coca Cola.
• Cannabis dispensaries were deemed “essential businesses” by many states and therefore remained open during lockdown.

New Dawn Risk is a specialist insurance intermediary providing bespoke advisory solutions.

Topics Trends USA Legislation Cannabis