Legal cannabis sales in the US have hit a record high, according to a new report from specialist insurance intermediary New Dawn Risk.
Since the publication of New Dawn Risk’s previous report last year, US sales of medical and recreational cannabis have skyrocketed, hitting $17.5 billion in 2020 – a 46% increase from 2019. In addition, the pro-cannabis Biden administration and a Democratic majority in both houses of Congress have transformed the legislative landscape.
A new Clarifying Law Around Insurance of Marijuana (CLAIM) Act has been introduced in the Senate, alongside the parallel SAFE Banking Act. Both pieces of legislation are expected to become law by the end of the year. This will permit insurers to work with the cannabis industry legally, and will also reduce some of the insurance risks previously faced by the industry, New Dawn Risk said.
For example, directors and officers cover will become a legally available option, and marijuana businesses will be able to regularize their banking and cash operations.
The new report examines the key drivers of growth and discusses both the potential premiums and the insurance gap for the cannabis industry. Highlights include:
- Thirty-six (36) 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 remained open during the COVID-19 lockdowns.
“The legal and regulatory environment of the cannabis industry has transformed over the past year,” said Max Carter, CEO of New Dawn Risk. “The changing attitude towards the cannabis industry, and new state and federal legislation, present an exciting opportunity for insurers to work with growers and sellers. With legalization of banking and insurance, the door seems likely to open to what could be a $1 billion premium market. On the consumer side, cannabis was deemed an essential business during the COVID-19 pandemic, and the growth of the sector seems inexorable. New Dawn Risk is committed to working with carriers and clients to share knowledge and insights to help identify and deliver cover for this untapped market.”