John Sparks, a Partner with Odom & Sparks, PLLC moderated a panel discussion on the blossoming cannabis industry in Oklahoma and implications and challenges faced by the insurance industry, given the uncharted nature of the market and the federal illegality issue. The panelist included Joe Marcantel, Director, Talisman Casualty Insurance Company and Michael Ridgeway, Partner with Odom & Sparks. A replay of this presentation is available to members through the AIRROC On Demand platform.
In 2018 the citizens of Oklahoma approved its medical marijuana legalization act, by a very close margin. Approaching 4 years since the law was enacted, Oklahoma is dealing with a proliferation of marijuana growers, processors, wholesalers and retail sales and associated businesses. The low barriers to enter the state’s marijuana market has seen an unequalled level of growth and production with 13,000 business licenses issued in less than four years. More marijuana is being grown in Oklahoma than the local population can consume. Aided by the intersection of cross-country corridors, Oklahoma grown marijuana is spreading across the nation. Such a financial influx also brings investors who wish to manage risk by insuring and reinsuring everything from growth to retail sales, including all the usual suspects: property, casualty, workers compensation, environmental, transportation, with the added complications of federal criminal and civil prohibitions and penalties.
The marijuana industry is uncharted territory for the insurance industry, which unsurprisingly has been cautious about entering the fray. Some of the challenges for insurers in this space include the variable risk exposures specific to cannabis, rating and pricing which is complicated by the lack of loss history and adequate industry trend data, as well as the potential losses and claims particular to cannabis industry. The cannabis industry is the Wild West. However, the combination of new revenue streams and job growth for states, in tandem with strong public support for legalization, means that this industry will continue to expand and eventually grow to the point of operating like other retail, manufacturing and agricultural firms. While the risks by and large fall within the scope of traditional insurance products, the unique challenges posed by the marijuana industry should be recognized and addressed.