Barriers to insuring cannabis crops in South Africa

Local insurance companies remain reluctant to cover farmers who produce cannabis for recreational and commercial purposes, largely due to the industry's uncertain legal status

- Thomas Walker

While South Africa moves closer to establishing its cannabis industry, many producers are still grappling with uncertainty. Managing risk in a regulatory environment that is still taking shape is chief among their challenges. Add to that the threats of climate change, and these problems are only exacerbated. Crop insurance has long been a pillar of traditional agriculture, but it remains out of reach for cannabis farmers.

This introduces a significant financial vulnerability. Adding fuel to the fire is the significant investment needed to meet strict compliance standards required for medicinal cannabis cultivation.

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South African farmers are able to secure coverage for most crops, including wheat, maize, and fruit; however, cannabis occupies a far more ambiguous space, as its legal status continues to create issues over the industry’s insurability.

South African producers who hold licences for cannabis production under the South African Health Products Regulatory Authority (SAHPRA) are operating within the bounds of the law. However, recreational and commercial cultivation remains a grey area, making insurers hesitant to underwrite cannabis-related risks. It’s not just about the legality of cannabis; it’s also about liability and optics.

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