Cannabis and Insurance

Although many states have decriminalized or legalized cannabis, it remains a Schedule 1 drug under the federal Controlled Substances Act. The conflict between federal and state law presents many complicated issues, including significant problems relating to insurance coverage. Insurance law seeks to balance competing policy interests. On one hand, public policy supports reading insurance policies broadly to indemnify policyholders for their losses. On the other hand, public policy counsels against permitting insurance to indemnify (federally) illegal activity. In this Article, we explore some of the pressing problems arising out of the conflict between these policy considerations in the context of liability, property, and employment-related insurance. We also explore emerging cannabis insurance policy options in states where cannabis is legal and discuss the advantages, but ultimate inadequacy, of those options. We conclude that policyholders are likely to find that their reasonable expectations of insurance coverage are unmet at this point in the emerging market