The U.S. hemp-derived CBD market has experienced significant growth in the recent past and exponential growth is projected into the future. One source, BDS Analytics, predicts US sales of cannabis- and hemp-derived CBD products will surge from $1.9 billion in 2018 to $20 billion by 2024, an astounding compounded annual growth rate of 49%. 

The growers, manufacturers, distributors and retailers in this space offer CBD Oil products from lotions and supplements to treat anxiety disorders, chronic pain and more, to food items and pet health. Hemp manufacturers in this space have developed rope, textiles, clothing, shoes, food, paper, bioplastics, insulation, and biofuel and use their seeds, rich in GLA (Gamma-Linolenic acid) and omega-3 fatty acids, for health benefits.

It’s an opportune time for agents to take initiative and seek opportunities to be of assistance to insureds who are leading the industry or looking to get involved as the economy begins to reopen. As an insurance brokerage, binding and programs provider, we offer an array of industry-specific insurance for the CBD and Hemp industry as well as Cannabis and Smoke & Vape retail shops.

From our experience and that of our carrier partners, this fast-growing space can also lead to two significant liability exposures in terms of regulations and consumer-protection.

  1. THC Quality Control Measures of CBD: Even though the hemp plant contains very little THC—the psychoactive compound in cannabis that creates a high—it was still outlawed until 2018 for this reason. Now, if it contains less than 0.3% THC, federal law allows for growing and commercializing hemp. Many manufacturers of CBD oils use marijuana plants that also contain THC and use processes that separate the THC from the CBD. This means that strict quality control protocols need to be in place to ensure CBD products are not over the legal limit for THC and to avoid potential liability.
  1. CBD Potential Product Liability Exposure: Although research is ongoing, many people are already using CBD as a health supplement and claim it can be used to treat or manage a broad range of diseases. The chronic diseases and health concerns of an aging population is one reason for CBD’s explosion in demand and industry investment. Because CBD products are typically ingested, inhaled, or applied topically, there is always the potential that someone may have an adverse reaction. This could be caused by a reaction to the CBD itself, or it could be caused by impurities including mold, bacteria, or inorganic materials.

If the injured party decides to sue the grower, manufacturer, distributor, or retailer, having product liability insurance ensures the claim is handled quickly and professionally, and prevents the insured from being directly responsible for paying settlements. There is a significant amount of similarity between the exposures faced by companies creating THC products as there are from those creating CBD products.

For more insights and coverage solutions, talk to your Blue River Underwriter or Breckenridge Insurance Services broker.




Agent Opportunities and Liability Considerations for the Fast-Growing CBD Marketplace was last modified: July 21st, 2021 by Breckenridge Insurance Services