Though it may be known by different names – pot, weed, Mary Jane, grass – everyone knows what good old cannabis is. But have you ever heard of delta-8?
Hop aboard as we navigate the uncharted territories - canna-incognita, if you will - of delta-8 and unravel its implications in the ever-evolving landscape of insurance.
Before continuing through this piece, be sure to stay informed with similar content by signing up for notifications.
Back in 2018, the Farm Bill was passed, and a new “green” gold-rush kicked off; industrial hemp was legalized from coast to coast, enabling farmers to begin seeding their fields with this most utilitarian of crops.1
You may be thinking: “What’s the difference between cannabis and hemp? Aren’t they the same?”
The answer is yes… kind of.
Hemp, by legal definition, is cannabis that contains less than 0.3% delta-9 THC, the main psychoactive component, or cannabinoid, that produces a high when ingested. So, industrial hemp isn’t intoxicating, right?
In the United States, industrial hemp cannot be legally classified as such if it contains delta-9 THC above the approved level. However, there are no specific restrictions on other types of THC, including delta-8. It's important to note that delta-8, while less potent than delta-9 THC, still has intoxicating properties.2
Because of this environment of regulatory ambiguity, delta-8 is legal to produce and sell, and it’s flooding the market. Selective breeding enables producers to increase delta-8 levels in their plants and rake in the benefits. In the short span between 2021 and 2023, the delta-8 market generated $2 billion in revenue.3
But what’s the big deal? Why should we be worried about delta-8 and similar substances proliferating across the country?
It’s worth noting that, as with many novel ideas or products, regulatory changes occur to meet the present moment. Upon publication of this article, delta-8 is banned in 17 states and severely restricted in 7 more.4 However, in 22 states and the District of Columbia, delta-8 remains fully legal with limited regulation.
Unlike other intoxicating substances like alcohol and recreational marijuana, there is little oversight in the states where it remains legal. This regulatory ambiguity presents several challenges and concerns:
Inconsistent Product Quality and Safety:
The lack of stringent oversight in states where delta-8 is legal can lead to inconsistencies in the quality and safety of delta-8 products. Without standardized regulations, there is a risk of variations in manufacturing processes, resulting in products of varying potency and purity that can expose consumers to higher levels of delta-8 than expected.
Public Health and Safety Risks:
The FDA has not assessed or endorsed delta-8 THC products for their safety or approval.5
There is a risk that unregulated delta-8 products may contain contaminants, residual solvents, or other harmful substances that could pose serious health risks to consumers. According to the U.S. Cannabis Council, the production of delta-8 may take place in unregulated or unhygienic environments, posing a risk of potential contamination.6
The natural amount of delta-8 in hemp is very low. However, manufacturers have developed the ability to skillfully synthesize hemp to achieve the highest allowable levels of delta-8; these concentration processes often involve potentially harmful chemicals and result in products which are remarkably potent.
Delta-8 products are sold in a variety of different retailers,
including convenience stores and smoke shops.
Consumer Misinformation:
The lack of information regarding proper usage, dosages, and potential side effects could increase the likelihood of misuse or unintended consequences, as users might not be fully aware of the risks associated with delta-8 consumption.7
Moreover, delta-8 may be present in products that are inaccurately labeled. For instance, a consumer seeking non-psychoactive CBD for pain management or sleep might unintentionally ingest delta-8, leading to an unexpected and unpleasant experience, the colloquial "bad trip".
Youth Accessibility:
The lack of strict controls may make it easier for these products to find their way into the hands of underage individuals, potentially leading to unintended health and developmental consequences. Unlike recreational marijuana – heavily regulated by the state and rarely sold outside of controlled environments – delta-8 can be sold anywhere from smoke shops and convenience stores to online retailers, increasing access for underaged individuals.
Furthermore, the packaging of delta-8 products into candies and other types of innocent looking treats can entice children, leading to accidental ingestion.
As if delta-8 wasn’t enough to deal with, it’s just the tip of the iceberg.
There exists a slew of quasi-legal psychoactive substances that are being peddled from everyday commercial establishments. These products include:
Delta-10, HHC, THC-O, and THC-P8,9
These are the lesser known, and lesser produced, cousins of delta-8. But just like delta-8, these psychoactive cannabinoids can be legally produced and extracted from hemp. They produce similar effects to both delta-8 and delta-9 THC, namely altered perception, euphoria, and relaxation.
Muscimol10
Known as the “delta-8 of mushrooms”, muscimol is the main psychoactive component in Amanita Muscaria, the classic red and white toadstool mushrooms. Commonly sold in gummy form, muscimol offers users a mild trip similar to the effect found in psilocybin, or “shrooms”.
Muscimol gummies are readily available for purchase in stores and online.
Salvia Divinorum11
Currently legal in 19 states, including Washington, this leafy plant contains a compound which can induce intense dissociative states and hallucinations. Though it’s effects only last a short period of time, they come on quick and powerfully.
In 16 of the states where it is legal, there is no age restriction to purchase this product.
Product Liability:
Insurers may need to navigate potential product liability claims related to delta-8 and similar products. This could include issues such as contamination, improper labeling, adverse effects, or consumption by underage individuals.
Underwriting Challenges:
The lack of consistent regulations and understanding of delta-8's long-term effects may pose challenges for insurers to accurately underwrite policies for businesses in – or related to - the industry.
Claims and Coverage Disputes:
As the industry evolves, insurers may face an increase in claims related to delta-8. Coverage disputes may arise, requiring insurers to carefully evaluate policy language and exclusions.
-- -- -- -- --
Ultimately, because delta-8 and similar products available on the market today lack regulation and government insight, it’s hard to determine where exposure to these products exists. Sure, they could be in every single convenience store and smoke shop, but how can one be 100% certain of that fact?
There is a glimmer of hope.
As mentioned above, 24 states have either restricted or outright banned delta-8, and more are considering similar moves, including North Carolina and Nebraska.
Regardless of how you feel about delta-8 and similar products, regulation is a good thing for everybody, consumers and non-consumers alike.
For insurers, regulation allows for further documentation of associated businesses, closing legal loopholes and affording underwriters a more complete understanding of exposures existing within their books of business.
Novel products create new exposures for insurance carriers.
WSRB has identified this emerging exposure and created ways to help carriers respond. If you write classes of businesses that are prone to selling these types of products and concerned with this product liability exposure, we have created and filed exclusionary language, specifically the BP1532 0919 - Cannabis Liability Exclusion.
This exclusion defines "cannabis" as such:
Any good or product that consists of or contains any amount of Tetrahydrocannabinol (THC) or any other cannabinoid, regardless of whether any such THC or cannabinoid is natural or synthetic.
Please read the form in its entirety for complete information.
For a list of cannabis related forms, search "cannabis' in the description field of the Filings Library. ISO/Verisk has also created similar forms which can be used for states other than Washington.
For help accessing the WSRB Filings Library, visit the Help Center. For additional filing assistance, contact our Subscriber Services and Compliance team.
-- -- -- -- --
CannabisFind can help you identify businesses in your portfolio that are engaged in the growing, processing, and retailing of cannabis related items.
[1] USDA, https://www.usda.gov/topics/hemp
[2] Michigan.gov, https://www.michigan.gov/cra/resources/consumer-connection/delta-8-information
[4] The Cannabis Industry, https://thecannabisindustry.org/member-blog-where-is-delta-8-thc-legal-and-where-is-it-banned-cbd-oracles-map-has-the-answers
[6] EMRA, https://www.emra.org/emresident/article/delta8
[7] CNN, https://www.cnn.com/2024/02/09/health/delta-8-thc-cannabis-wellness/index.html
[8] Vaping360, https://vaping360.com/learn/hhc/
[9] Seattle Met, https://www.seattlemet.com/discover/thc-delta/what-is-thc-p/
[10] Moonwlkr, https://moonwlkr.com/blogs/news/amanita-gummies-effects/
[11] DEA, https://www.dea.gov/factsheets/salvia-divinorum