For more than a century, cannabis has been the epicenter of an ongoing legalization debate in the U.S.; however, there has been a profound shift in that debate in the last 20 years. Although the focus of the debate has been on the use of cannabis, the perception and understanding of the plant has dramatically changed due to its medical benefits. With the majority of states legalizing cannabis, demand is high, a new market is emerging, and a new segment of insurance is budding.
Today, only a handful of states remain where cannabis is still illegal, compared to 20 years ago where only 8 states were legal. The growing acceptance of cannabis use, whether recreational or medical, has created a new market that is projected to reach $40 billion in the next 5 years with an overall economic impact of $130 billion. With more than 28 thousand active cannabis businesses in the U.S. today, this evolving market is forcing the need for an entirely new insurance segment.
As with any emerging market, there are always challenges and risks involved. Cannabis growers and dispensaries have a major challenge of receiving inclusive and affordable insurance to protect their businesses. Major insurers are hesitant to offer coverage due to the division between state and federal status. Although states have legalized cannabis, the uncertainty at the federal level is causing confusion on how best to handle this new market. However, if the industry continues to trend as it is today, it is likely a matter of time before we see federal legalization and regulation.
The hesitancy from major insurers is really no surprise. Technically, cannabis is still federally considered an illegal narcotic and insurers that are more risk averse are not ready to take that risk.
Currently, there is a small number of insurers in the U.S. that offer cannabis insurance; however, a huge segment of insurers are closely watching the market develop as there are still many unanswered questions about where this is all going. Despite the obvious legality questions, some in the industry have concerns about the impact this can have on commercial real estate values, others are banking on this becoming mainstream and blended into existing coverages (e.g. crop, farm, and various commercial products), and others just don’t have the right technology to even support it.
Regardless of where the market ends up, it is clear that now is the time to get ahead of the competition, and ClarionDoor is paving the way for insurers to launch their cannabis programs fast and capitalize on market opportunities.
The ClarionDoor Experience
ClarionDoor not only provides the most intelligent insurance product distribution software on the market, we also deliver versatility and flexibility. With any new market, like cannabis, most legacy technology systems are not adequate to support them and require extensive coding to make them work. Not only is it more challenging for the insurer, it also positions them to be less competitive.
The reality is that insurance markets won’t wait for you. To be ahead of the competition, you need a platform where you can design, configure, and distribute your products fast. ClarionDoor’s software was explicitly designed to do just that, empowering insurers to take full control of their insurance products. Built on a cloud-native, API-first architecture, ClarionDoor’s software is ideal for the insurtechs and startups that are looking to take advantage of new markets, and for the veteran insurer looking to broaden their portfolio.
To learn more about how ClarionDoor can enable you to enter new markets or modernize your existing products, contact us at firstname.lastname@example.org.
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