As public perception and the legality of cannabis and other novel psychoactive substances continue to evolve, what emerging risks and litigation should insurance professionals keep an eye on?
Last week, Verisk Analytics hosted a webinar to answer those questions and highlight trends associated with recreational marijuana, hemp-derived cannabis products and other substances. Subject matter experts also touched on psychedelic drugs and therapies.
Cannabis Landscape
Twenty-four states and the District of Columbia have legalized recreational cannabis. Medical cannabis is legal in 40 states. To drive home a point of continued cannabis industry enthusiasm among advocates and a growing base of opposition, Laura Panesso, associate vice president of governmental relations at Verisk, shared that 16 states proposed legislation to legalize and regulate adult-use marijuana use last year.
“Interestingly enough, none of those passed,” Panesso said. Voters also rang in on five ballot measures in 2024; only one, a medical cannabis measure in Nebraska, was approved. Seven states have proposed cannabis-related bills in 2025.
On the federal level, President Donald Trump issued a statement before the election “largely aligning himself with the Biden administration, where he affirmed that he supports legalizing the recreational use of marijuana,” Panesso said. The president also voiced support for focusing “on research to unlock the medical uses of marijuana to a Schedule 3 drug” in a September post on Truth Social.
The SAFER Banking Act is expected to be filed as a bill again this session — but that introduction “does not really appear to be imminent, as some reports have suggested,” Panesso said. The act would provide a federal safe harbor protection to financial institutions, lenders, insurers and others serving the cannabis industry.
Connection Between Marijuana Potency and Litigation
Some of the growing litigation emerging in the cannabis market are starting to feature potency, according to Greg Scoblete, a principal on Verisk’s Emerging Issues team.
The perception that marijuana is an essentially harmless substance “may be a perception based on a marijuana product that may not really exist anymore,” he explained. Marijuana studied by health researchers appears to be “a significantly more potent product,” he added, pointing to possible links between marijuana consumption and a range of potential mental health harms.
The increasing number of lawsuits reportedly targeting entities within the cannabis market now includes allegations of personal injury tied to cannabis products.
“Now, it’s a small percentage of the overall legal activity that’s been reported in the cannabis market, but given this health research I’ve highlighted here, it is possible, at least in principle, that it may grow if more individuals experience adverse health impacts from cannabis consumption,” he said of the personal injury allegations.
Multiple product liability cases filed against one major cannabis brand allege that teenagers — among others — who consumed its products suffered from acute mental health problems, Scoblete shared.
Meanwhile, a class action lawsuit alleges that several cannabis firms mislabeled their products to downplay potency and conform to the state’s legal limits. And in Minnesota, plaintiffs are alleging that dispensaries sold products that contained as much as 20 times the legal amount of THC.
Interestingly, plaintiffs have also taken the other side, alleging the products they consumed were not potent enough, Scoblete explained.
“All of this sort of rolls into what appears to be a persistent issue within these legal marijuana markets: product testing, label accuracy, enforcement of testing and accuracy requirements,” Scoblete said.
“This still appears to be a significant challenge.”
Hemp-Derived Cannabis Products Overview
The 2018 Farm Bill, among other things, created a market for hemp products that contain no more than 0.3% delta-9 THC, the molecule in marijuana responsible for creating a high. But legal hemp contains many psychoactive molecules in small quantities, Scoblete explained, and entities have mined them to create “marijuana-like products that aren’t technically marijuana,” creating “an expanded universe of intoxicating hemp.”
Though not nearly as large on a market value basis as the market for marijuana products, they have grown rapidly into a multi-billion-dollar industry since 2018. Analysts have noted that these products appear to sell well in states that haven’t legalized recreational marijuana.
“Some of these are reportedly extremely potent,” Scoblete said, noting that the synthesized THC-O has been likened to a hallucinogenic, such as LSD. At the same time, it appears that businesses are synthesizing the tiny amount of delta-9 in legal hemp and creating “fully synthetic marijuana products,” Scoblete said.
The current Farm Bill runs to Sept. 30 and would need reauthorization to continue. A number of states have also regulated or restricted delta-8, which is already banned in 13 states, Panesso said.
A challenge surrounding hemp-derived products is the lack of research regarding their health impacts. The FDA’s voluntary adverse event reporting system is one source of data, though, and it shows about 15 delta-8 reports per quarter.
There have been lawsuits filed over personal injury tied to cannabis products, but none of the delta-8 litigation Verisk has found to date involves claims of health harms; the allegations generally revolve around purity or product labeling. Late last year, a class action lawsuit was filed against a manufacturer alleging that its vapes “contained delta-9 THC exceeding the federally allowable limit of 0.3% despite being marketed as delta-8,” Verisk reported on the Emerging Issues section of its website.
A similar lawsuit was filed against another delta-8 pen and cartridge manufacturer by the same class action plaintiff in the same month, Verisk said.
Have A Look at Other Emerging Substances
Kratom-related deaths “appear to be generating litigation against entities within the kratom supply chain,” Scoblete said. One award last year totaled $11.6 million, and Verisk has identified another case in which plaintiffs are seeking more than $10 million in damages in wrongful death litigation. According to the National Institute on Drug Abuse, kratom is an herbal substance that can produce opioid- and stimulant-like effects.
Growing interest in microdosing psychedelic drugs has coincided with changing legal and policy attitudes in parts of the US. Policymakers in Oregon have established a regulated framework for psilocybin (the active chemical of magic mushrooms) services in the state, and psychedelics have been decriminalized in Oregon and Colorado, as well as in cities such as Detroit, Seattle and San Francisco.
More than three dozen psychedelic-related bills have been introduced across more than a dozen states since the start of this legislative session. Last year, the FDA declined to approve the use of MDMA for the treatment of PTSD, and last fall, communities across Oregon voted to scale back access to psilocybin.
Go Deeper
Watch the full webinar on the Verisk website.
