AM Best: Administration’s Executive Order Could Provide Impetus Towards Stabilizing the Cannabis I

Why It Matters

Rescheduling accelerates pathways to standardized risk assessment, broader insurance availability, and mainstream banking—reducing costs and volatility for producers and suppliers while enabling greater institutional investment and product development. The transition will take time as insurers and regulators build up long-term claims and actuarial data.

Summary

An executive order from President Trump to reclassify marijuana from Schedule I to Schedule III could rapidly change the legal and commercial landscape for cannabis-related businesses, AM Best analysts say. Rescheduling would permit medical prescriptions and long-term institutional research, generating the actuarial and claims data insurers need to underwrite risks more confidently. It would also make cannabis crops eligible for USDA crop insurance subsidies and likely open conventional banking and credit access to the industry. For now, insurers have largely relied on excess and surplus lines markets to provide tailored coverage, but a gradual shift toward mainstream carriers is expected as data accumulates.

Original Description

Associate Director David Blades and Associate Analyst Alexander Winant, both of AM Best, discuss a new Best's Commentary that finds the executive order doesn’t immediately resolve insurance issues for cannabis-related businesses, but the move to reclassify marijuana under federal law could be a significant step for the insurance market.