These Are the Top 5 Insuring Cannabis Stories for 2021

Article

The year for the cannabis industry went by like a puff of smoke – and we need make no excuse the bad pun for a year that was a) forgettable, b) not the sort of year that legalization advocates hoped for, and c) forgettable (it bears mentioning twice).

Insurance Journal as part of its coverage of insurance and cannabis did its best to keep on top of the intersection of two industries that couldn’t be more different. We also put out a regular podcast on the topic, as well as a bimonthly Insuring Cannabis newsletter.

The top read stories that concerned cannabis and insurance included a highly read article on federal legalization, stories on newly legal states, and big acquisition of a cannabis insurance firm. Numerous stories on trends within the space were also well read but didn’t make the top five list.

Following are the top five insuring cannabis stories of 2021.

1) With Federal Legalization Expected, Cannabis Insurers Quietly Get Ready to Roll

A story from Reuters around the middle of the year on how insurers are “quietly gearing up for a potential ten-fold increase in sales” in the cannabis industry as Congress “inches closer to legalizing pot at the federal level” was one of the more popular stories.

While legalization, which looked to be a safe bet with the party that has traditionally been the biggest supporter of it firmly in the driver’s seat steering the federal government, it turned out to be a big nothing burger.

While 36 U.S. states and the District of Columbia having legalized cannabis for medical or recreational use, U.S. legal cannabis sales jumped 45% last year and are expected to hit $41 billion in 2026, according to data firm BDSA.

However, the insurance industry only wrote roughly $250 million in policies last year, according to estimates by Reuters, and the handful of carriers that were offering products were not offering much.

That helped keep rates high – and a poll of cannabis brokers working at a large brokerage points to rates in key lines heading up 10% or more next year.

2) Wisconsin Gov. Proposes Legalized Marijuana — Recreational and Medical

Legalization at the federal level may be perennially stalled, but states continued to roll out the welcome mat for the industry.

Several articles on legalization by states were well read. The most read among those was when Wisconsin Gov. Tony Evers made headlines in August when he proposed legalizing marijuana and regulating and taxing it like the state does alcohol.

Evers made the proposal in his 2021-23 biennial budget, which estimated that legal marijuana would generate more than $165 million annually beginning in the second year of the biennium (Fiscal Year 23).

“Legalizing and taxing marijuana in Wisconsin — just like we do already with alcohol — ensures a controlled market and safe product are available for both recreational and medicinal users and can open the door for countless opportunities for us to reinvest in our communities and create a more equitable state,” Evers said in a statement released by his office.

The governor’s announcement cited a 2019 Marquette University Law Poll showing that nearly 60% of state residents support adult use legalization and 83% support the legalization of medical marijuana.

Evers previously called for medical marijuana legalization in his 2019-2021 biennial budget but Republicans in the Legislature rejected that proposal.

Despite some bipartisan support, Evers didn’t get his wish in 2021.

Read below for more on states and legalization.

3) Studies Find Crash Rates Rise When States Legalize Marijuana; Suggest Link to Alcohol

The Insurance Institute for Highway Safety and the affiliated Highway Loss Data Institute in June published a report showing increasing evidence that “motor vehicle crash rates rise when states legalize recreational use and retail sales of marijuana.”

The report, which notes that what effects marijuana by itself has on drivers remains unclear, notes that crash rates spiked with the legalization of recreational marijuana use and retail sales in California, Colorado, Nevada, Oregon and Washington.

The report is a bit contrary to preliminary results of a separate IIHS study of injured drivers who visited emergency rooms in California, Colorado and Oregon, which showed that drivers who used marijuana alone were no more likely to be involved in crashes than drivers who hadn’t used the drug. That is consistent with a 2015 study by the National Highway Traffic Safety Administration that found that a positive test for marijuana was not associated with increased risk of being involved in a police-reported crash.

“Our latest research makes it clear that legalizing marijuana for recreational use does increase overall crash rates,” IIHS-HLDI President David Harkey said in a statement. “That’s obviously something policymakers and safety professionals will need to address as more states move to liberalize their laws — even if the way marijuana affects crash risk for individual drivers remains uncertain.”

4) One80 Makes Cannabis Buy-in with Cannasure Insurance Services Acquisition

One80 Intermediaries’ acquisition of Cannasure Insurance Services early in 2021 was among the biggest insuring cannabis news of the year.

The purchase Boston, Mass.-based One80 Intermediaries, a privately held, national wholesaler and program manager with offices throughout the U.S. and Canada, of the Ohio-based wholesale broker and managing general agent focused on the cannabis and hemp industry, created quite a buzz.

Cannasure’s founder after the announcement appeared on an Insuring Cannabis podcast along with other industry experts to talk about the implications of the deal.

Cannasure is a national wholesale broker, program manager and third-party administrator that serves cultivators, dispensaries, extractors, processors, product manufacturers, testing labs, landlords and ancillary businesses in all states where cannabis and hemp are legal. It offers coverage on a monoline or package basis.

“The Cannasure acquisition ensures that we stay at the forefront of the industry, providing unmatched protection to cannabis and hemp businesses helping them thrive,” Matthew F. Power, president of One80 Intermediaries, said in a statement.

5) RICO Suit against Colorado Cannabis Firms Highlights D&O Dearth

A scarcity of directors and officers coverage for cannabis companies took on an even bigger spotlight following a Colorado lawsuit in which two large cannabis operators and several executives were accused of illegally transporting marijuana to Arkansas.

The lawsuit also invoked the Racketeer Influenced and Corrupt Organizations Act, or RICO, which seeks increased damages for the plaintiff.

Among the firms named is Chicago, Ill.-based Verano Holdings, which is accused in the lawsuit of illegally transporting marijuana from its home state of Illinois to Arkansas.

While medical marijuana is legal in Arkansas, cultivation, sale, and possession of the drug remains federal offenses in Arkansas. Cannabis also remains a controlled substance in the eyes of the federal government, as the lawsuit notes.

The allegations of illegal interstate marijuana shipments stem from the attempted acquisition of Verano by Phoenix, Ariz.-based Harvest Health & Recreation in a deal that fell through last year, according to the Chicago Sun-Times.

6) Bonus

This is a top five list, but as previously mentioned, numerous well-read insuring cannabis stories had to do with states and legalization.

Following are some of the more popular among those:

Topics Cannabis

Was this article valuable?