High hopes: Can insurance keep pace with the THC drinks boom?

As consumer preferences shift away from alcohol and towards wellness oriented alternatives, cannabis and THC infused beverages are beginning to make a name for themselves in the US.

THC, which stands for tetrahydrocannabinol, is the primary psychoactive compound found in cannabis plants. Although its possession, supply, production and movement in the UK is illegal, THC is, however, permitted for medicinal purposes.

In the US, meanwhile, the legality of THC usage varies state-by-state – this has enabled a burgeoning THC beverage market. In mature cannabis markets such as California and Colorado, for instance, infused beverages have become some of the fastest-growing product categories of the past two years.

For example, May 2025 statistics from Fortune Business Insights predicted that the global cannabis beverages market size would grow from $3.09bn (£2.3bn) in 2024 to $117.05bn (£86.7bn) in 2032. In the US alone, the cannabis beverages market size is estimated to reach $81.44bn (£60.3bn) by 2032.

Charles Pyfrom, chief marketing officer at CannGen Insurance Services – which specialises in cannabis related insurance underwriting – told Insurance Times that this projected growth makes THC beverages a trend that the UK insurance sector should be cognisant of.

“Cannabis attitudes are evolving rapidly and public sentiment is shifting in a positive way towards THC drinks,” he explained. “People seek them for reasons like wellness, social experiences, or functional ingredients, which makes the demographics quite expansive.

“We are seeing an increased number of companies reaching out to get guidance on the risk these drinks bring to their business, which shows that the interest isn’t slowing any time soon.”

With such a large predicted market size, there are clear opportunities for insurers – even if interest from traditional carriers remains muted for now.

“Most traditional insurers remain cautious due to federal restrictions, limited actuarial data and reputational concerns,” Pyfrom said. “However, we’re beginning to see an increase in interest, especially in states with established regulatory frameworks for adult use legal cannabis.

“But until federal laws change or the THC risk becomes better defined, the [associated insurance] market will likely be dominated by specialists.”

Risks and regulations

One of the biggest factors limiting uptake of THC beverages is the lack of regulation.

Despite hemp derived THC being made legal as part of America’s 2018 Farm Bill – something that has not yet happened in the UK – there remains an ongoing debate about how hemp derived THC products and licensed adult use cannabis products are regulated.

For now, however, that regulation remains light, increasing the risk of THC infused beverages.

“Hemp isn’t subject to the same strict regulatory checks, THC limits, testing, or oversight as the adult use cannabis industry. This can, unfortunately, lead to differences in product safety and quality,” Pyfrom noted. “This raises the insurance liability risks and creates grey areas [that can] put the business at greater risk.

“Insurers must carefully evaluate how each operator manages licensing, testing, labelling and consumer safety when they’re selling THC drinks.”

These risks get even greater when alcohol is involved – something underwriters need to be acutely aware of when underwriting businesses that offer both THC and alcoholic beverages.

“From an insurance perspective, there is a lot of potential risk with serving THC drinks and alcohol side by side,” Pyfrom said.

“Like alcohol, overconsumption, impaired judgement and rowdiness can occur, causing potential issues. Unlike alcohol, THC’s delayed onset makes impairment harder to quantify, especially when users are unfamiliar with the product and its effects.

“When the two are combined in the same establishment, it could lead to claims involving bodily injury, liability, or regulatory violations.”

This means that businesses hoping to tap into the THC beverages trend may struggle to secure coverage – particularly where cover for multiple substances or state jurisdictions is required, with the lack of regulatory clarity amplifying insurer hesitancy. This could leave businesses exposed.

“General liability and product liability are often the most scrutinised, especially if the business is operating across multiple jurisdictions,” Pyfrom said. “It can also be a challenge to acquire excess coverage, as many traditional insurance carriers still avoid the cannabis and hemp space.

“Businesses that serve cannabis beverages on-site may also face hurdles securing liquor liability coverage if insurers view the THC exposure as a compounding risk.”

Cover innovations on the table

So, what could help make insurance more accessible and affordable for cannabis beverage companies?

“We need more defined national regulations to create a standard across the board and reduce underwriting uncertainty to quell insurers’ hesitations,” Pyfrom said.

“The more transparent and well managed a business is, the more insurable it becomes, which ultimately lowers costs and improves coverages.”

Ultimately, Pyfrom is confident about the prospects for the market and expects further coverages to be developed as the sector grows.

“As the market matures, we expect to see more tailored insurance offerings, including endorsements specific to on-site consumption or other infused products,” Pyfrom explained.

“Coverage for training programmes, digital compliance tools and even integrated loss control services could also emerge.

“Insurers will need to innovate alongside the industry as the demand for these products increases.”