You've built a successful cannabis operation. Now your team is looking at adding hemp-derived CBD products, hemp flower, or wellness lines to expand the customer base and the revenue mix.
The product strategy makes sense. The insurance side, less so — and most operators don't realize the gaps until a hemp-related claim is filed against a policy that wasn't written for it.
Cannabis vs. hemp: why insurance treats them differently
From a federal standpoint:
- Cannabis (marijuana, >0.3% THC) remains a Schedule I controlled substance. Most general insurance policies exclude it by default, requiring specialty cannabis programs.
- Hemp (≤0.3% THC) was federally legalized for commercial cultivation and processing under the 2018 Farm Bill. Hemp products are technically not Schedule I — but that doesn't mean they're treated like a normal CPG product.
The result: a policy written for your cannabis operation may explicitly exclude hemp products, and a policy written for hemp may not coordinate with your cannabis coverage. Operators who add hemp lines without updating their policy structure end up with uncovered exposure on the new product line.
The four most common gaps when expanding into hemp
1. Products liability
If your hemp products are ingestible — gummies, tinctures, beverages, topicals — products liability is the single biggest exposure. A claim alleging contamination, mislabeled THC content, or adverse reaction can run into seven figures. Many cannabis general liability policies do not extend to ingestible hemp products without an explicit endorsement.
2. Crop insurance
If you're cultivating hemp, the crop itself needs coverage. Standard agricultural crop insurance has limited hemp programs, and the protection differs significantly from how you'd insure cannabis flower. Coverage for weather, theft, and disease all depend on the specific hemp crop endorsement.
3. Processing and equipment coverage
Equipment used for cannabis extraction can usually be repurposed for hemp processing — but your property policy may schedule it under a cannabis-specific exposure rating. Adding hemp throughput without updating the schedule can leave the equipment under-covered or excluded entirely.
4. Distribution and shipping
Hemp products generally ship across state lines (cannabis cannot). Your existing transit coverage may be silent on hemp because it was written assuming everything stays in-state. A specialty hemp transit endorsement, or a coordinated cargo policy, fills that gap.
Three questions to ask before you launch a hemp line
- Does my current general liability policy explicitly cover hemp products as defined under the 2018 Farm Bill?
- Does my products liability extend to ingestible hemp items?
- Do I need a separate transit/cargo endorsement for hemp shipments leaving the state?
If the answer to any of these is “I don't know” or “I'll have to check” — pause your hemp expansion until the gap is closed.
Closing the gap
Spire writes both cannabis and hemp programs and structures coverage so the two product lines don't conflict. Contact a Spire agent before you launch your hemp expansion, and we'll review your existing policy stack and identify what needs to be updated, added, or rewritten.
All coverage is subject to underwriting. No coverage is bound or altered until confirmed by an authorized Spire representative.
