Budding Considerations: Cannabis-Related Insurance Issues

Budding Considerations: Cannabis-Related Insurance Issues

By Amy Elizabeth Stewart and Katie Glenn

“Budding Considerations: Cannabis-Related Insurance Issues” was published in the Insurance Coverage Journal of the American Bar Association’s Litigation Section in January 2019.

The pace with which cannabis has attained varying levels of legality in several U.S. states – combined with the fact that it is still illegal under federal law – gives rise to a special set of risks facing marijuana-related businesses, on top of those faced by every business, particularly those in the agricultural and manufacturing sector, Stewart and Glenn write.

“While a handful of insurers have embraced the cannabis sector, others remain wary of the risks. Lloyd’s of London, for example, instructed its syndicates to not write the industry because marijuana is still listed as a Schedule I drug under federal law. As the insurance market answers the cannabis sector’s demand for insurance products and issues policies to cannabis-related businesses, coverage disputes are taking shape around the uncertainties in both the risks and the policies written to insure them.”

The article discusses the challenges businesses and insurers face as they seek to cover this growing industry, and offers some lessons learned from coverage litigation involving cannabis-related activities.

The authors conclude: “A candid discussion regarding the nature of the risks to be insured—and not to be insured—is necessary to ensure that the policy performs as intended.”

Although the original article is available only to ABA Litigation Section members, the full text is available in the PDF below. 

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