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Growth of cannabis industry brings added exposures

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The cannabis industry and the commercial insurance markets for it have seen substantial growth over the past decade, although some insurance issues persist, according to Ian Stewart, chair of the national cannabis and hemp law practice at Wilson Elser Moskowitz Edelman & Dicker LLP in Los Angeles.

That growth also has brought with it added exposures, Mr. Stewart said during a Monday session at Riskworld, the Risk & Insurance Management Society Inc.’s annual meeting in Atlanta.

For some lines, such as general liability, auto and workers compensation, there are many insurers and brokers for cannabis operators, said Mr. Stewart, who has been involved with cannabis law since 2014. “Since then, there’s been an explosion in the cannabis market,” he said.

Still, areas such as excess coverage and some specialty lines can be challenging, and the market remains largely surplus lines, he said.

As the market has grown, so have its exposures, Mr. Stewart said.

As the market has grown, so have its exposures, Mr. Stewart said. As manufactured products increase their share of sales, they bring with them product liability lawsuits. Thus far, most of these suits have been about ancillary liability, involving the product but not bodily injury, such as mislabeling, consumer recalls or problems with testing labs.

There has also been increased focus and research on the possible risks associated with cannabis use “We’re starting to see science and medicine catch up with public policy and medicine,” Mr. Stewart said.

The American Heart Association has advised members to be cautious of possible elevated risk of cardiovascular problems associated with cannabis use, and other research has suggested a potential correlation between cannabis use and increased chance of mental health issues, Mr. Stewart said, citing two possible new exposures.

“Risk managers are needed for the cannabis industry,” Mr. Stewart said, noting that some larger, multistate operators do have formal risk management functions.