Federal Push to Reclassify Cannabis Could Transform Insurance Market for Industry

OG article by R&I Editorial Team

February 3, 2026

Efforts in Congress to reclassify cannabis from Schedule I to a lower controlled substance category could reshape insurance availability and coverage for the cannabis sector. Currently, its federal illegality under Schedule I limits traditional insurance options, forcing businesses to rely on high-cost specialty policies or go uninsured for certain risks like crop loss, liability, or property damage. Reclassification (potentially to Schedule III or similar) would recognize accepted medical use and lower abuse potential, easing banking, tax burdens under IRS Section 280E, and insurer participation. Insurers hesitant due to federal-state conflicts could expand offerings, reducing premiums and improving risk management for growers, retailers, and processors. This shift might attract mainstream carriers, foster product innovation (e.g., crop, product liability, workers' comp), and stabilize the market. However, full rescheduling requires DEA action and faces political hurdles. Industry stakeholders view it as transformative for financial security, enabling growth and professional risk transfer previously unavailable. While details depend on final scheduling and regulations, the push signals potential normalization and broader insurance integration for cannabis operations nationwide.