Banks and insurers could be affected by impending changes in the United States cannabis industry after a major shift in policy to reclassify marijuana as a less-dangerous drug.

In fact, Donald Trump’s executive order to expedite the reclassification could be driven by the reinsurance industry, according to a commentary on AM Best TV from associate director David Blades and associate analyst Alexander Winant, with contributions by Christine DePalma.

The order, signed in December 2025, aims to fast-track the reclassification of cannabis from a Schedule I drug to a Schedule III drug, a move that a Best analyst said could have profound implications for cannabis-related businesses and the insurance market. ​

Marijuana’s Schedule I classification under federal law excludes it from the US Department of Agriculture’s Federal Crop Insurance Programme and deters major private insurers from offering coverage to CRBs. ​This has left the cannabis insurance market in a precarious position, facing high costs and limited options. ​

However, the reclassification to Schedule III could alleviate some of these challenges by enabling CRBs to access business tax breaks, including deductions for operating expenses such as rent, utilities, employee wages and insurance. ​

The reclassification may also encourage traditional banks and financial institutions to engage with the cannabis industry, which has had limited access to financial services due to federal anti-money laundering regulations. ​

This shift could also pave the way for more insurance companies to enter the market and provide coverage options to cannabis businesses. ​

Furthermore, the executive order’s focus on expanding medical marijuana and cannabidiol research could lead to a better understanding of the medical risks and benefits of cannabis and then to the development of stronger insurance products and coverage options for CRBs. ​

Reinsurers are expected to play a critical role in shaping the market by determining capacity, pricing and coverage limits, analysts said.

Despite the potential benefits, the executive order does not fully legalise cannabis at the federal level. ​Banks and insurers will still need to navigate complex federal regulations, including anti-money laundering rules, which could continue to discourage them.

Analysts emphasise that further legislative action, such as the proposed Secure and Fair Enforcement Regulation Banking Act, could provide more comprehensive protections for financial institutions and insurers serving CRBs. ​

​The cannabis insurance market remains highly specialised, with unique risks and liabilities that complicate underwriting. ​CRBs face challenges such as cash-heavy operations, high-value inventory and increasing product liability claims related to contamination or mislabelling. ​

The lack of historical performance and little actuarial loss data make matters worse for insurers, driving up costs and limiting coverage options. ​

Emerging products, such as hemp-derived THC beverages, add another layer of complexity to the market. ​Insurers are cautiously exploring these new products, but the long-term regulatory environment remains uncertain. ​