{"id":21121,"date":"2023-12-15T22:50:10","date_gmt":"2023-12-15T22:50:10","guid":{"rendered":"https:\/\/www.insurancejournal.com\/?p=752279"},"modified":"2023-12-15T22:50:10","modified_gmt":"2023-12-15T22:50:10","slug":"cannabis-insurance-specialists-see-optimism-in-2024-data-planning-for-growth-and-more-capacity","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2023\/12\/15\/cannabis-insurance-specialists-see-optimism-in-2024-data-planning-for-growth-and-more-capacity\/","title":{"rendered":"Cannabis Insurance Specialists See Optimism in 2024 Data, Planning for Growth and More Capacity"},"content":{"rendered":"<p><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2018\/08\/how-surety-bonds-are-covering-californias-cannabis-580x386.jpg\"><\/p>\n<div><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2018\/08\/how-surety-bonds-are-covering-californias-cannabis-580x386.jpg\" class=\"ff-og-image-inserted\"><\/div>\n<ul class=\"nav nav-tabs tabs tabs-entry\">\n<li class=\"active\"><a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2023\/12\/15\/752279.htm\">Article<\/a><\/li>\n<li><a href=\"https:\/\/www.insurancejournal.com\/news\/west\/2023\/12\/15\/752279.htm?comments\" rel=\"nofollow\">0 Comments<\/a><\/li>\n<\/ul>\n<div class=\"article-content clearfix\">\n<p>From a broad view, data from the cannabis industry fails to paint an informative picture of what lies ahead for the business in 2024 or what the year holds for insurance professionals specializing in servicing the sector.<\/p>\n<p>Despite a prevailing public focus on the cannabis glut hampering sales in long-legal states, data from industry analysts show cannabis sales overall in the U.S. are poised for growth next year and beyond \u2013 with strong performances from new states and emerging product categories.<\/p>\n<div class=\"bzn bzn-sized bzn-intext\">\n<ins data-revive-zoneid=\"79\" data-revive-topics=\"cannabis,data-driven,trends\" data-revive-companies data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>Some of that growth is because cannabis is now legal for adult-use or medical-use in most states, putting <a href=\"https:\/\/www.marijuanamoment.net\/53-percent-of-americans-now-live-in-a-legal-marijuana-state-report-from-former-federal-officials-firm-shows\/\">53% of Americans in a legal state<\/a>, which is expected to help drive cannabis sales over the next few years to $54 billion by 2027, according to <a href=\"https:\/\/mjbizdaily.com\/us-cannabis-sales-estimates\/\">the MJBiz Factbook<\/a>.<\/p>\n<p>Dragging on that growth is increased competition that has pushed the average retail price of cannabis down. Data from cannabis analytics firm BDSA shows average retail prices across mature markets \u2013 Arizona, California, Colorado, Nevada and Oregon \u2013 <a href=\"https:\/\/bdsa.com\/content\/pricing-compression-in-an-evolving-cannabis-market-2\/\">fell 13% between the third quarter of 2021 and the same time in 2022<\/a>, with some markets seeing price compression higher than 20%.<\/p>\n<p>Despite the downward trend, cannabis consumer participation is literally higher than it\u2019s ever been, and new legal markets are opening every year, making the cannabis \u201cone of the fastest growing and most dynamic industries worldwide,\u201d according to BDSA.<\/p>\n<p>Next year, total U.S. cannabis sales are forecast to grow 10% or more, according to the firm.<\/p>\n<p>What that broadly means for cannabis insurance specialists is there will be ample growth in newer markets, and tough competition in mature markets where businesses are eying bottom lines.<\/p>\n<p>But the whole truth is far more detailed, and insuring cannabis opportunists may want to pay closer attention to the more granular data.<\/p>\n<div class=\"bzn bzn-sized bzn-intext-2\">\n<ins data-revive-zoneid=\"162\" data-revive-topics=\"cannabis,data-driven,trends\" data-revive-companies data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<div class=\"article-inline-sidebar article-inline-sidebar-left\">\n<span><strong>Top 5 Cannabis Market Predictions for 2024<\/strong><\/span><br \/>\n<span>Cannabis analytics firm BDSA compiled its top predictions for the cannabis market next year.<\/span><br \/>\n<span>They aren\u2019t specific to insurance, but the predilections should be of interest to the more savvy professionals who service the industry. These have been edited for brevity.<\/span><br \/>\n<span><strong>Intoxicating hemp products:<\/strong> The development of intoxicating hemp products will provide unprecedented opportunity and risk. Hemp-derived intoxicating cannabinoids are already widely available through many channels including convenience stores, smoke shops, and direct-to-consumer. Licensed brands are leaning into the space, with beverages leading the way. This trend is expected to continue as more brands navigate the risks and benefits of operating in an unknown and rapidly evolving space.<\/span><br \/>\n<span><strong>New York market:<\/strong> Constrained retail availability and illicit competition will continue to limit New York\u2019s adult-use market. The adult-use market has faced an uphill battle. More than 400 adult-use retail licenses have been issued, but as of December only 27 retailers were selling in New York. A limited licensing program is compounded by illicit competition, with as many as 1,400 illicit sellers in New York City alone. New York sales are expected to hit $1.3 billion in 2024, but with 15 million consumers and a participation rate estimated at 46%, that\u2019s far short of the true potential.<\/span><br \/>\n<span><strong>Consumer preference:<\/strong> Consumer preference for convenience will drive shifts at the subcategory level and innovative products will gain popularity. Topline product category share has solidified across legal markets, with vape and flower making up the largest market share, followed by edibles then extracts. The biggest changes across U.S. markets is forecast at the subcategory level. One shift comes within the disposable vape category. Between Q3 2022 and Q3 2023, disposable vapes\u2019 share of total vape sales grew by more than 50%. These changes are likely driven by consumer preferences for convenience.<\/span><br \/>\n<span><strong>Brands:<\/strong> As mature markets stagnate, brands will be able to use in-house genetics and proprietary strains to differentiate themselves within the flower category and drive brand share growth. Some of the best-selling strains in mature markets are proprietary genetics. In Q3 2023, 25% of the 50 best-selling strains in California and Colorado came from a single brand. In California, single-brand strains that were among the top 50 best-sellers held an equivalent average retail price 34% higher than the average.<\/span><br \/>\n<span><strong>Pricing:<\/strong> Price conscious consumers in emerging markets will drive big gains in the shake\/trim\/lite category. Making up a 2%-dollar market share, this is the smallest inhalable category. However, recent trends show that it is on the rise, especially in emerging markets. STL dollar sales in Illinois rose 10% between Q3 2022 and Q3 2023, even while the average retail price for the category fell. STL sales have grown in Pennsylvania from less than $1 million in Q3 2022 to $8 million in Q3 2023. This is an opportunity for brands to grow sales by attracting price conscious consumers.<\/span>\n<\/div>\n<p>A new report out from Hub International examining 2024 in insuring cannabis reflects that mixed bag, and the reality of insurance in a riskier world \u2013 more severe wildfires in California and more severe storms and the realities of the risks inherent in any sort of agriculture. It also reflects the growing opportunities in emerging products and new markets.<\/p>\n<p>\u201cLosses related to catastrophic events such as fires, particularly those caused by a failure of High Intensity Discharge (HID) lighting systems used to grow crops, or theft of expensive cannabis products like cannabis oil, present further challenges to profitability,\u201d Hub\u2019s report states. \u201cAnd a rapidly spreading plant pathogen called HLVd could cost cannabis growers billions of dollars in coming years.\u201d<\/p>\n<p>The report also addresses concerns with extreme weather events (droughts, floods, storms and wildfires) affecting yields for some cannabis growers.<\/p>\n<p>\u201cThe impact of these events is a significant concern for the industry, with 62% of HUB International\u2019s 2024 Outlook Executive Survey cannabis respondents citing climate change and natural hazards as a top risk to profitability in 2024, followed by loss of credibility and business interruptions,\u201d the report states.<\/p>\n<p>Jay Virdi, chief sales officer, specialty practices group, industry segment leader for North America at HUB, summed up his feelings on the insuring cannabis space in 2024.<\/p>\n<p>\u201cIt\u2019s an ongoing challenge,\u201d Virdi said. \u201cMature markets will continue to struggle with growth as there are too many restrictions due to state regulations and federal illegality. There is some optimism about rescheduling and SAFER Banking all the way to the belief that federal legalization will happen sooner than later. With cautious optimism we will continue to support and advocate for the cannabis industry in every way that we can.\u201d<\/p>\n<p>Virdi was overall upbeat about the market, and plans to beef up staff in the speciality in accordance with that view, which he later expanded upon in an interview.<\/p>\n<p>The possibility of new laws and regulations making doing business in cannabis better and more profitable seems to be a leading point of optimism for a number of specialists spoken with.<\/p>\n<p>\u201cWe\u2019ll be growing in all states,\u201d said Charles Pyfrom, chief marketing officer and CannGen Insurance Services LLC. \u201cWhat we\u2019re optimistic about from a legal change is positive. We\u2019re in a position of helping those who want to grow. I\u2019m feeling really good about next year.\u201d<\/p>\n<p>Pyfrom acknowledged that his bullishness in part is because CannGen\u2019s name and position means it will withstand any hard times in the mature markets.<\/p>\n<p>\u201cEverybody knows our name, and it\u2019s a good position to be in,\u201d he added.<\/p>\n<p>TJ Frost, president of Symphony Grow, is also encouraged by the prospects of SAFE Banking and descheduling, but more importantly, he\u2019s hearing from reinsurers who are encouraged by those prospects.<\/p>\n<p>\u201cI\u2019ve received a significant amount of calls from reinsurers looking to enter into the space just because all of the movement around the possibility of descheduling the product,\u201d Frost said.<\/p>\n<p>When he was being interviewed by a reporter on Thursday, he\u2019d just got off two phone calls from people at reinsurers who were asking him about their data and how Symphony Grow feels about certain aspects of the market.<\/p>\n<p>\u201cWe\u2019re going to see an expansion of carriers, we\u2019re going to see an expansion of limits,\u201d he said. \u201cWe just opened our 11th office location and now have international capabilities, and we\u2019re focused on growing in the newer states.\u201d<\/p>\n<p>He continued: \u201cLike everyone right now, we are continuing to keep a close eye on the East Coast, Midwest and South. We have expanded our footprint office and talent in those locations to better serve our clients in the surrounding areas.\u201d<\/p>\n<p>Virdi said Hub will continue serving all segments of the specialty whether or not they are plant-touching, such as HUB\u2019s cannabis dispensary insurance program, its cannabis benefits captive insurance and its services for cannabis operations with retirement and wealth needs.<\/p>\n<p>\u201cOur main focus will be to assist the middle-market to large growers\/processors that continue to expand their business rapidly,\u201d he said. \u201cWe will assist them in staying compliant and protected as they grow their business.\u201d<\/p>\n<p>The bright-sides that color these insuring cannabis expert outlooks are borne out by analysis inside and outside the cannabis industry.<\/p>\n<p>InvestorPlace\u2019s <a href=\"https:\/\/investorplace.com\/2023\/12\/rescheduling-legalization-7-cannabis-stocks-set-to-surge-in-2024\/#:~:text=As%202024%20looms%20on%20the,a%20shift%20in%20public%20opinion.\">assessment of 2024<\/a> is that \u201cthe cannabis sector stands at the cusp of an exciting era,\u201d likely fueled by political backing and stronger public opinion on descheduling. The assessment also points to the U.S. Department of Health and Human Services\u2019 recommendation to reclassify marijuana as a Schedule III controlled substance.<\/p>\n<p>Cannabis Business Executive featured interviews with, of course, <a href=\"https:\/\/www.cannabisbusinessexecutive.com\/2023\/12\/whats-in-store-for-2024\/\">cannabis executives looking out to 2024<\/a> with thoughts including the possibilities of rescheduling and 280E tax relief enabling companies to pay down debt and reduce annual interest expenses, strategies of creating brands and products that resonate with consumers, and optimism for novel and hemp-derived cannabinoid products driving industry sales.<\/p>\n<p>Prohibition Partners is forecasting international sales could be <a href=\"https:\/\/prohibitionpartners.com\/reports\/the-global-cannabis-report-2\/\">worth up to US $103.9 billion<\/a> in the next two years, while <a href=\"https:\/\/newfrontierdata.com\/product\/the-global-cannabis-report-2021\/\">New Frontier Data asserts<\/a> total global consumer spending on legal and illicit high-THC cannabis alone is projected to grow to $496 billion by 2025.<\/p>\n<p class=\"tagtag\"> <span class=\"tagtag\">Topics<\/span> <a href=\"https:\/\/www.insurancejournal.com\/location\/california\/\" class=\"btn btn-sm btn-primary tagtag\">California<\/a> <a href=\"https:\/\/www.insurancejournal.com\/trends\/\" class=\"btn btn-sm btn-primary tagtag\">Trends<\/a> <a href=\"https:\/\/www.insurancejournal.com\/location\/new-york\/\" class=\"btn btn-sm btn-primary tagtag\">New York<\/a> <a href=\"https:\/\/www.insurancejournal.com\/data-driven\/\" class=\"btn btn-sm btn-primary tagtag\">Data Driven<\/a> <a href=\"https:\/\/www.insurancejournal.com\/cannabis\/\" class=\"btn btn-sm btn-primary tagtag\">Cannabis<\/a> <\/p>\n<\/p><\/div>\n<div class=\"article-poll\" data-post=\"752279\">\n<div class=\"article-poll-vote\">\n<p>Was this article valuable?<\/p>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-no\">\n<form class=\"feedback-form\">\n<p>Thank you! 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