Cannabis Operations Remain Challenged in Securing D&O Insurance

The need for cannabis companies to secure Directors & Officers insurance is no different than the need of any other business. Like most companies, cannabis operations are at risk of potential litigation brought against their executive teams for alleged wrongful acts. However, despite the growing need for coverage, securing affordable D&O insurance coverage for cannabis ventures is becoming increasingly difficult. 

According to Business Insurance, cannabis D&O policyholders are facing significant rate increases for their insurance due to hard market conditions, with some experts anticipating this trend will continue over the next 18-24 months. A recent article in MJ Biz found that compared to those for other industries, D&O rates for cannabis companies are on average significantly higher – well above the 5%-20% D&O insurance rate increase that non-cannabis companies are currently paying in today’s hard insurance market.

And then there is COVID-19. Reuters reports that due to the pandemic, many investors in cannabis companies are facing financial challenges due to market downturns brought on by the pandemic. As a result, some cannabis operations have been unable to deliver what they originally promised – resulting in costly lawsuits against cannabis business executives, board members, and the like.  

Lastly, there is a lack of capacity for coverage. The simple fact that cannabis remains illegal under federal legislation inherently makes D&O insurance a less-than-desirable risk for some insurers, substantially limiting the number of markets.  


Despite these challenges, potential changes are on the horizon. As the economy improves and we begin to see changes in federal and state legislation in a post-pandemic world, the industry will be afforded greater opportunities for growth and become more profitable. In turn, we’ll likely see the market potential for affordable D&O insurance rapidly expand. 

If you’re a cannabis business owner in need of D&O coverage and not sure where to start, contact the experts at Oakwood D&O. As one of the fastest-growing brokerages for D&O liability insurance, you benefit from direct access to dedicated and knowledgeable professionals who can help you secure the coverage you need at an affordable price.

Get in touch – email Eli Solomon, CEO, at or call (323) 686-7519.

You can also follow Oakwood D&O on LinkedIn.