Cannabis & Hemp Business Insurance in 2026: Risks, Regulation and Coverage Trends

The cannabis industry continues to grow, but not without some problematic flash points in the first half of 2026.

For starters, the global cannabis industry is expected to reach $102.7 billion in 2026 and $428.2 billion by 2032, according to Fortune Business Insights, while support for legalizing cannabis stands at 87%.

The global cannabis insurance market is growing at a similar pace, with the industry expected to rise to $6.7 billion by 2032, at a 14% compound annual growth rate.

See last year’s 2025 cannabis business insights report to compare new growth within the industry.

“The cannabis industry has entered a more professionalized stage,” said Cimone Casson, a licensed insurance agent at Cannas Capital in Grand Rapids, Mich., in a recent research note. “Global legalization momentum continues, with countries like Germany and Australia advancing reforms, yet U.S. federal legalization remains uncertain, leaving businesses in a patchwork of compliance rules. For insurers, this means balancing risk with opportunity.”

Areas of opportunity and concern have also emerged with cannabis sector growth, with Cassone citing three key industry issues rising, as the cannabis industry “needs insurance more than ever.”

• Operational Risks Intensify: “Cultivation facilities face fire hazards, theft, crop failure, and regulatory scrutiny,”  Casson said. “Losses from indoor facility fires alone can be staggering.”
• Professionalization Pressure: “Securing insurance is now seen as a benchmark of credibility for cannabis businesses,” Casson added.
• Rising Premiums & Stricter Underwriting: “Insurers are tightening standards, making coverage harder to obtain but more valuable,” Casson stated.

With those industry needs in mind, here are the key flash points between the cannabis and insurance industries.

Cannabis rescheduling is heating up

There’s movement on marijuana rescheduling talks from Schedule I to Schedule III with the Trump administration right now

“A blueprint is currently being developed by a patient-first coalition outlining recommendations for medical cannabis,” said Matthew Myro Rothman, chief science officer at Cannalnx by EM2P2, a cannabis health services provider. “That framework is expected to be submitted to the administration ahead of a formal cannabis commission, which is anticipated to launch this summer. The goal is to complete the bulk of the rescheduling work before the fall.”

There are ongoing discussions about the rescheduling initiative, but as of now, no final change has been implemented. “For insurers, the practical reality remains the same,” said  Spencer Mio, client advisor at Acrisure in Detroit, Mich. “Cannabis is still treated as a federally illegal operation for underwriting and banking purposes, which continues to limit carrier participation and capacity despite state‑level legalization.”

Farm bill, illegal hemp, and the commercial and insurance impact

For years, hemp products have existed in a legal gray zone, becoming widely available, lightly regulated, and often misunderstood. That’s now changing quickly in Washington, D.C., and the ripple effects could hit not just consumers but also insurers, retailers, and even homeowners.

At the center of that shift lies the Agriculture Improvement Act of 2018, better known as the 2018 Farm Bill, and a new federal push to tighten the rules around hemp-derived THC products. That legislation legalized hemp nationwide, as long as it contained no more than 0.3% delta-9 THC, the primary psychoactive compound in cannabis.

Congress’s narrow definition created an unintended workaround. Cannabis manufacturers began producing compounds like Delta-8 THC (a chemically altered version of THC), THCA flower (which converts to THC when heated), and THC-infused drinks and edibles derived from hemp. Because these products technically complied with the “delta-9 only” rule, they spread quickly; often sold in gas stations, smoke shops, and online with minimal oversight.

Now, federal lawmakers are moving to close that loophole in a 2025 federal measure, separate from the pending Farm Bill, redefining hemp to include “total THC,” not just delta-9. That means all THC variants (delta-8, delta-9, THCA) are counted together, and synthetic cannabinoids are effectively banned

Insurers will have to get a firm grip on the new reality that numerous products currently sold as “legal hemp” would no longer qualify as legal under federal law starting in late 2026.

“As of now, there is no clear definition of how a potential hemp ban or closure of the Farm Bill loophole would be implemented,” Rothman noted. “These issues are expected to be addressed as part of broader federal cannabis discussions taking place this summer. Insurers should closely monitor the findings of the commission and any resulting regulatory guidance.”

State-level cannabis guidance continues to be formulated

State legislative activity on cannabis remains mixed, with some states expanding adult‑use or refining regulatory structures, while others continue to stall or reverse course. “This patchwork environment requires insurers to underwrite on a state‑by‑state basis, factoring in licensing protections, enforcement posture, and regulatory maturity,” Mio said.

Other cannabis experts say the insurance market is seeing some momentum, but also some fragmentation.

“Some states are advancing adult-use programs, while others are rejecting or stalling legislation,” said Dr. Priyanka Sharma, co-founder and co-CEO of Kazmira Therapeutics in Denver, Col.“What’s notable is that even in states where legalization fails, public support continues to rise.”

The market is also seeing states shift focus from expansion to tightening existing programs. “That’s mainly through stricter licensing, enforcement, and product standards, which adds another layer of complexity for operators and insurers,” Sharma said.

For 2026, the end result is a long-term trajectory toward expanding the cannabis insurance market. “Yet in the near term, operators and insurers must navigate a patchwork system, not a unified market,” Sharma added. One exception is that some states are implementing the new federal definition of hemp ahead of the November, 2026 deadline,” Sharma noted.

Cannabis business insurance trends and best practices

Insurance industry cannabis coverage options have expanded modestly over the past year, but cannabis insurance remains highly specialized, with these channels being the most prominent.

Cultivators: Property and crop coverage remains limited, with most policies only covering named perils rather than full crop failure.

Manufacturers and retailers: Product liability, contamination risk, and recalls remain top concerns. “That’s especially the case given recent attention on testing inconsistencies,” Mio noted.

Adult‑use vs. medical: Medical operators generally face slightly broader carrier appetite. “That’s due to tighter regulations and lower perceived loss frequency,” Mio added.

Non‑plant‑touching businesses: These policies are often easier to insure, “but exclusions tied to cannabis revenue and contracts must be reviewed carefully,” Mio said.

Audits: Insurance audits are “pushing companies toward higher operational discipline, which is ultimately a good thing,” Sharma said.

Retailers and Brands: There’s more availability in general liability and product liability, but premiums reflect the uncertainty of the regulatory environment,” Sharma noted.

Cannabis models: Policy-wise, a growing area to watch is regulated, medical-oriented cannabinoid models (e.g., compounding pharmacies or prescription-based frameworks). “This market may be viewed more favorably due to higher clinical oversight and documentation standards,” Sharma added.

Here’s how cannabis use is impacting personal insurance

The insurance industry has begun to enter the consumer side of medical cannabis, with more than a dozen personal insurance programs now offering some form of support for patients seeking reimbursement for medical cannabis purchases.

“That said, some of the more advanced models are already moving beyond theory,” Rothman said. “Platforms like CannaLnx by EM2P2 are helping connect patients, providers, insurers, and dispensaries within HIPAA-compliant frameworks, allowing certain employer-sponsored health plans to begin reimbursing medical cannabis as part of broader wellness benefits. Many of these programs are actually much more affordable than traditional health plans.”

More broadly, more than 100 insurance companies are actively evaluating how cannabis fits into their offerings. So far, early underwriting perspectives “have generally been favorable toward its therapeutic potential,” Rothman said.

Additionally, generalized cannabis personal insurance policies are an area where perception is evolving faster than policy. Here’s a capsule look.

Health insurance: Most health insurance providers still do not cover medical cannabis, largely due to federal classification. “That said, we may see incremental change if rescheduling progresses,” Sharma said. “Even with rescheduling, coverage would likely be gradual and limited, as insurers typically require FDA-approved products and established reimbursement pathways.”

Homeowners and renters insurance: Generally, cannabis products are treated like other personal property. “Yet coverage can be limited, especially if quantities exceed ‘personal use’ thresholds or violate local laws,” Sharma noted. “Coverage limitations often arise when cannabis is cultivated, stored in large quantities, or associated with business activity in the home.”

Auto insurance: Unlike alcohol, there is no universally accepted impairment threshold for cannabis, which creates additional complexity for insurers and enforcement.

“In this environment, Cannabis-related DUIs are becoming a bigger focus, but we’re not yet seeing a distinct ‘cannabis DUI insurance’ category,” Sharma said. “Instead, it’s being folded into broader impaired driving risk.”

Life insurance: Life policies are among the markets where consumers are seeing the most normalization. “Cannabis use is increasingly treated similarly to alcohol or tobacco, depending on frequency and disclosure,” Sharma added. “Disclosure remains critical; undisclosed cannabis use can still impact underwriting decisions or claims.”

Looking Forward Through the Rest of 2026

Of all the issuing changing cannabis companies right now, perhaps preparation from cannabis companies, or lack of it, is the biggest issue.

“I’ve been tracking the cannabis insurance market since California first legalized recreational use in 2016, and there’s one issue most business owners miss,” said Sam Meenasian, vice president of sales and marketing at USA Business Insurance. “In our view, standard general liability policies almost always exclude cannabis-related claims. I’ve seen dispensaries lose everything because they assumed they were covered.”

The cannabis businesses that survive in 2026 and beyond are the ones that treat insurance as infrastructure, not an afterthought. “They’ll work with carriers who actually understand the regulatory patchwork,” Meenasian noted. “Because it’s not just about having a policy, it’s about having one that pays out when you need it.”