The Role of Insurance Defense Law Firms in the Cannabis Industry
Ever since the Controlled Substance Act of 1970, cannabis has been a tricky drug for the government to regulate. Recent waves of states making the switch from prohibition to legalization have opened up a whole new area of business, but what does it mean for insurance defense law firms? These businesses are not only producing a consumable product with no real precedent, but also must navigate the complexities of a young industry still under federal prohibition.
So, keeping all the above considerations in mind, could insurance defense law firms be an asset to the cannabis movement? The cannabis movement itself has been attributed to the stigmas of “mass incarceration” and “disproportionate arrest rates”, which means that while white Americans make up 75% of the nation, 40% of incarcerated persons are white. The black community is one of the most impacted minorities in America, with arrest rates for cannabis at four times higher than that of their white counterparts.
As more and more states continue to jump on the lex icon of cannabis, insurers and insurance defense law will likely see coverage litigation and liability claims over the cannabis industry. The cannabis industry is still in its infancy, meaning not only is the business growing and growing at a rate comparable to the gold rush, but risk factors are as unpredictable. Being able to predict what unforeseen things could happen with a new drug would be like trying to predict when the next vintner will capitalize on the wine craze of the past 40 years.
The best factor to highlight when it comes to insurance in the cannabis industry is that even today, it remains prohibited by federal law. The further states venture away from federal guidelines and impose their own regulations and use of the cannabis plant, the more they may face surprises on the back end down the road. Insurance companies may find themselves in litigation over a lack of coverage or uncovered claims.
Lawyers and their insurance defense firms could have a high potential of involvement and coverage disputes may not even stop at the insurer, it may go all the way to the reinsurer – another industry still learning what the cannabis movement means for them. When it comes to the good and the bad of the cannabis industry and what could mean for their insurance companies on a legal front, insurance defense law firms are sure to play a huge role in the unfolding saga of what the industry means to the changing world around us.
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