Hemp market faces regulatory and insurance-related trials and tribulations
With the legalization of cannabis in Canada, the market for hemp, a variety of cannabis that has 0.3% THC content or less, has also grown. After October 2018, the plant could legally be used in the production of CBD, which is derived from industrial hemp.
“Whereas before, hemp producers couldn’t flower the product, and they would have to destroy it, they’re now allowed to have flowering heads on the hemp plant. They can then sell it to a cannabis processor that’s licensed by Health Canada to process cannabis, and they can then take those flowering heads and process them for uses such as extracting CBD,” said Sherry Boodram (pictured), CEO of the cannabis regulatory consulting firm CannDelta, and a speaker at the upcoming Cannabis Cover masterclass in Toronto. “That’s a really large market and it provides a great opportunity for hemp growers.”
Nonetheless, hemp and its products are subject to different regulations, and while those have expanded, insurers are still hesitant about providing insurance coverage to hemp growers.
“I think [the regulations are] legitimizing the entire industry as a whole and normalizing it,” said Boodram. “My hope is that eventually insurance companies will feel more comfortable insuring cannabis companies and hemp companies, and the different facets that they may [operate in], because it’s not as clear cut as, you just grow hemp and that’s all you do – there are a lot of different things you could do with the plant itself. I think it’s important to normalize it and help people understand the different activities that could be done within the industry, and that they may need to be insured differently, depending on the level of risk and the supply chain.”
For insurance professionals, building awareness around the hemp industry and more broadly, the various applications of the cannabis plant, is key if they’re interested in stepping into this emerging insurance business – and the upcoming Cannabis Cover masterclass will be a great venue to do that.
“I think education is lacking in this space in general. There aren’t very many ways to get information and it’s not as simple as reading regulations – Health Canada doesn’t make things very clear on their website,” said Boodram, adding that Cannabis Cover “is a forum to learn, discuss, and present different scenarios, so that they can see different things that may happen, and issues that hemp farmers and cannabis processors may be facing, and then hopefully be able to fill in some of the gaps that insurance may not cover or may not even consider at this point in time.”