What a journey it has been for the evolution of the Cannabis industry in recent years. As the research into this plant continues, so does product innovation alongside public knowledge. Liability Insurance Underwriters are taking wind to this information and have begun to refine their contractual language (coverage position) on how they wish to “insure” against the liability associated with hemp-derived cannabidiol (CBD).

In the past, Liability Insurance Policies were somewhat “loose” with respect to the included definition of CBD Coverage. On any Nutraceutical Liability Policy, you will find an Exclusion for Marijuana. For those that began to incorporate hemp-derived CBD into their product mix, an underwriter would review such product, and change the form to an Exclusion for Marijuana with a Hemp Exception (i.e., giving coverage back for hemp).

Many businesses may look at that form title and determine that they are insured for liability arising from the sale of hemp or hemp-derived CBD products. The form would then read along the lines of ONLY insuring for hemp-derived CBD with less than 0.3% THC—and that is that.

From there, insurance companies began to specifically call out that the exception only applies to hemp having a Delta-9 THC concentration of no more than 0.3% THC on a dry weight basis.

And now, the hot topic today is Delta-8. Though only off by a few characteristics to that of Delta-9, one can clearly see that the Liability Insurance Policy language will often specifically point back to that of coverage applying to Delta-9 only.

I’ve spoken to many business owners wanting to bring Delta-8-THC into their product mix. The starting point of these conversations is to review the In-Force Liability Policy for the business to see how the policy currently addresses the coverage for hemp derived CBD products. If your business is selling products that contain CBD, this is a friendly reminder to pull up your Full Liability policy and do a quick keyword search for hemp; CBD; marijuana; or THC to take you to the policy language that outlines the insurance company’s stance on coverage.

Delta-8 poses its own challenges. Back when hemp-derived CBD was exponentially gaining popularity, insurance companies were hesitant to participate due to federal guidelines and (at the time) lack of their own education on such exposure. Delta-8 is going through the same scrutiny by underwriters today.

State of the Insurance Market for Delta-8-THC
As of today, there are two insurance companies that will “consider” providing Liability Coverage for any products that have Delta-8 in them. Depending on which insurance company is providing your Liability Insurance policy, there may be changes that you have to make.

The Change Cycle, usually entails:

1. Receiving your underwriter’s approval (or declination) on adding Delta-8 to the existing coverage. (If shopping for your first policy/new coverage with Delta-8 in your product portfolio, many insurance companies will decline to quote at all.)
2. If declined, a mid-term switch to a new insurance policy with one of the two available, is worth considering.
3. Insuring Delta-8 usually comes with a higher price tag as well as strict underwriting guidelines to be met in order for coverage to apply.

If you would like to discuss your insurance coverage, I am always happy to review, advise, or take appropriate action on any found concerns.

On the brink of a “Hard Insurance Market,” (a separate topic for discussion) it’s important to review these items during each renewal process to ensure all avenues are explored. 

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Chris Morey

Chris Morey is associate vice president at Bolton & Company. He is a Certified Sports Nutritionist who focuses on the needs of clients within Bolton’s Dietary Supplement Practice Group. With more than seven years of customer service experience, Morey looks to find the right insurance solutions for his clients in the Health and Fitness industries. With a substantial focus on the supplement industry and all parts of the supply chain, he also strives to serve the hemp and CBD product space as the insurance industry continues to fluctuate and evolve. Prior to joining Bolton in 2015, Morey worked for Nutrishop USA. He holds a Bachelors of Arts in Business Administration from Azusa Pacific University. He can be contacted at cmorey@boltonco.com.