The cannabis industry isn’t slowing down — and neither is the insurance market that supports it. As regulations evolve and businesses scale, understanding how insurance capacity, rates, and carrier appetites shift is essential. Here’s what retail insurance agents and their clients need to know to stay ahead of the curve.

1. THE MARKET IS GROWING — BUT STILL UNSTABLE

The cannabis insurance market continues to expand, fueled by new entrants and competition. But federal illegality still clouds the picture. While rescheduling cannabis to Schedule III is unlikely under the current administration, future optimism remains. For now, businesses must manage risks amid regulatory complexity and emerging exposures.

2. PROPERTY INSURANCE: A MIXED OUTLOOK

Capacity is available — especially for indoor grow operations in low-risk areas — but losses from theft, lighting issues, and water damage are tightening the market. Rates are rising 10%–15% for properties in wildfire or hurricane zones, while top-tier indoor operations with solid risk controls may see rate reductions.

While new program entrants have attempted to streamline small business placement through technology, many of these tech platforms remain inadequate. This leaves a significant portion of distribution partners underserved, and this market segment is grossly undervalued.

Security matters more than ever. Detailed security plans (e.g., cameras, controlled access), fire suppression, sprinkler systems, strict safe and vault protocols, and LED lighting are critical for favorable terms. Properties with prior theft or fire claims may see sublimited offerings or layered placements with higher retentions.

3. CROP INSURANCE: DEMAND UP, CAPACITY SELECTIVE

Indoor growers benefit from better risk modeling and slightly decreasing rates (down 5%–7%). However, outdoor crops will see different results. Wildfire and storm risks are driving premiums up 15%–20%. Insurers are rewarding those with tech-driven climate control and strict pest management.

New specialized MGAs and carriers are entering the space, offering limited capacity for select risks. Water damage and theft deductibles are rising. Accurate inventory valuations and grow schedules are essential for underwriting. Outdoor risks require detailed wildfire prevention plans to secure capacity.

4. LESSORS RISK ONLY (LRO) GAINING STEAM

With more landlords leasing to cannabis tenants, LRO insurance is heating up. Non-CAT zone properties with stable, regulationcompliant tenants enjoy flat or slightly decreasing rates. But for older buildings in high-risk zones? Rates are climbing 10%–15%, and finding coverage can be challenging. Terms are stable, though insurers demand landlord and tenant compliance with state laws and robust lease agreements to mitigate exposure. Landlords with long-term lease agreements and tenant operations with financial stability and adherence to cannabis regulations are heavily weighted. Building condition reports and tenant-specific improvements and upgrades can unlock better terms.

5. CARGO COVERAGE: RISKY ROAD AHEAD

Cannabis cargo insurance is a growing necessity as distribution networks expand, yet capacity remains constrained and limited. Theft during transit is surging, particularly in urban corridors and states with lax enforcement, pushing cargo rates up 10%–20%. Coverage is available for those using armored or GPS-tracked vehicles, but cash-heavy or untracked shipments face high deductibles or coverage limits. Rates remain unpredictable for insureds even with robust security (e.g., dual-driver protocols). Terms and conditions are stringent, reflecting the high-risk nature of moving cannabis products. Detailed bill-of-lading and realtime tracking systems are key to securing coverage. Routes through high-theft areas may require layered placements.

6. GENERAL LIABILITY: SOFTER MARKET, BUT NOT WITHOUT RISKS

Thanks to new competition, rates are dropping 7%–12%. Still, insurers remain cautious about slip-and-fall claims and premises liability. High-crime areas could trigger higher deductibles unless strong safety and surveillance protocols exist. Evidence of employee training and premises maintenance (e.g., lighting, egress signage, sophisticated surveillance systems) may improve pricing.

7. PRODUCT LIABILITY: STILL A TOUGH CROWD

Product liability insurance for cannabis firms remains a high-hazard line. Claims (e.g., contamination, mislabeling, inconsistencies in lab results) are up 15%, and premiums by 10%–15%. Capacity is stable but selective. Manufacturers with Good Manufacturing Practice (GMP) certification and robust quality control processes stand a better chance of securing capacity. Deductibles are increasing for higher-risk products like edibles and vapes, while terms tighten or are excluded around emerging cannabinoids (e.g., delta-8). Regulatory uncertainty keeps this market firm, though potential rescheduling could ease pressures. Third-party lab testing and compliance documentation are typically non-negotiable, and claims history heavily influences pricing and capacity.

8. MANAGEMENT LIABILITY LINES: MORE CAPACITY IN GENERAL

After years of higher premiums, cannabis Directors & Officers (D&O) insurance began to soften in mid-2024. It’s down 15%- 20% from 2024 highs. Carriers are eager to write business for cannabis firms with solid leadership, strong financials, and M&A potential. Experienced operators and a tenured board of directors can lead to a more successful placement experience. Terms are broadening, with fewer regulatory exclusions. Cannabis companies can often secure lower deductibles and enhanced coverage, which are critical as consolidation and M&A activity rise.

The cannabis industry is also seeing a greater number of distressed cannabis companies in both the public and private spaces struggling with liquidity issues, which in some instances result in filing for receivership. Some publicly traded cannabis clients are also delisting or going dark. The crime market is still limited to just a few carriers. In addition, EPL claims remain frequent, especially with dispensaries.

9. CYBER: UNDERRATED BUT URGENT

Despite digital growth, only 10%–15% of cannabis firms buy cyber insurance. That’s a problem, especially when rates remain 2–3x higher than in other sectors due to limited carrier appetite and cash-heavy operations elevating ransomware risks. Competition is scarce, and capacity is limited to a few specialized MGAs and carriers. Terms are improving, but exclusions for unencrypted data or lax security persist, with concerns about the industry still present. Carriers demand robust cybersecurity protocols, like MFA and staff training, to offer competitive terms. Network framework security protocols are also critical.

10. WORKERS’ COMPENSATION: A BRIGHT SPOT

Federal illegality poses a minimal impact here, making this a bright spot for insureds. In contrast to other lines, Workers’ Compensation remains competitive. Capacity is available as more standard carriers enter the space, viewing it as a lower-risk line. There has been a recent uptick in claims frequency, primarily from cultivation injuries, manufacturing, and processing. Rates are flat or down 5% in mature states like California, Colorado, and Oregon. The key to better terms? Safety programs, Occupational Safety and Health Administration (OSHA) compliance, return-to-work support, and a strong internal culture.

BOTTOM LINE

As the cannabis industry matures, the insurance market is catching up—but not without complexity. Brokers who understand shifting conditions across lines and proactively guide clients through underwriting challenges will be best positioned to deliver value. Starwind Cannabis is helping lead that charge with exclusive capacity, proprietary policy forms, and a streamlined placement process built for today’s cannabis risks. Backed by AM Best A-rated security and available nationwide through select partners, the Starwind Cannabis Program offers tailored, efficient solutions for seed-to-sale operators. Reach out to your CRC Group producer today for assistance that provides clarity, confidence, and a better client experience.

CONTRIBUTORS

• Tony McIntosh is the President of Starwind Cannabis. He has over 20 years of industry experience, including retail property and casualty brokerage experience, and over a decade of delegated underwriting expertise.
• Eric Morrison is an Executive Vice President with Starwind Cannabis. He has over 20 years of insurance experience and plays a key role in creating cannabis insurance solutions.
• Preston Philips is a Broker with CRC Group’s Denver office. He specializes in Cannabis risks, Hospitality and Entertainment, Manufacturing and Retail, and Real Estate.
• Michele DeLuca is an Associate Broker with CRC Group’s San Francisco office, specializing in Casualty placements.
• Dixie Noel is a Director with CRC Group’s San Francisco office. She has over 25 years of industry experience and specializes in D&O for emerging risks.
• Tracy Ruchty is an Associate Broker with CRC Group’s Seattle office, specializing in Property risks.

END NOTES

1. State Medical Cannabis Laws, NCSL, 2025. https://www.ncsl.org/health/state-medical-cannabis-laws
2. U.S. Cannabis Market Size & Trends, Grand View Research. https://www.grandviewresearch.com/industry-analysis/us-cannabis-market