As Public Perception and Legality of Cannabis and Novel Psychoactive Substances Continue to Evolve, What Emerging Risks and Litigation Should Insurance Professionals Keep an Eye On?

Last week, Verisk Analytics hosted a webinar to address these questions and highlight trends associated with recreational marijuana, hemp-derived cannabis products, and other emerging substances. Experts also discussed psychedelic drugs and therapies.

Cannabis Landscape: A Shifting Legal and Regulatory Environment

Twenty-four states and the District of Columbia have legalized recreational cannabis, while medical cannabis is legal in 40 states. Despite the enthusiasm of industry advocates, opposition remains strong. Laura Panesso, associate vice president of governmental relations at Verisk, noted that 16 states proposed legislation to legalize adult-use marijuana in the past year, yet none were successful.

In 2024, voters weighed in on five cannabis-related ballot measures, with only one—a medical cannabis initiative in Nebraska—being approved. Seven states have proposed new cannabis-related bills in 2025.

At the federal level, President Donald Trump expressed support for legalizing marijuana for recreational use, aligning himself with the Biden administration’s stance. Trump also voiced support for reclassifying marijuana as a Schedule 3 drug to facilitate medical research.

The SAFER Banking Act, which would provide federal safe harbor protections to financial institutions serving the cannabis industry, is expected to be reintroduced, though an imminent filing appears unlikely.

Marijuana Potency and the Rise of Cannabis-Related Litigation

Greg Scoblete, a principal on Verisk’s emerging issues team, highlighted the growing legal scrutiny surrounding marijuana potency. The perception of cannabis as a relatively harmless substance may no longer align with modern, highly potent products, which some researchers link to potential mental health risks.

An increasing number of lawsuits are emerging in the cannabis sector, including allegations of personal injury linked to cannabis consumption. While these cases remain a small fraction of total cannabis-related legal activity, Scoblete suggested that this trend could grow if more individuals experience adverse health effects.

Some product liability cases allege that major cannabis brands sold products that led to acute mental health issues in teenagers and others. Meanwhile, a class action lawsuit accuses multiple cannabis firms of mislabeling products to understate potency. In Minnesota, plaintiffs claim dispensaries sold cannabis products containing THC levels up to 20 times the legal limit.

Interestingly, lawsuits have also surfaced from plaintiffs alleging that products were not as potent as advertised, raising further concerns about product testing and labeling accuracy.

Hemp-Derived Cannabis Products: Expanding Market, Increasing Risks

The 2018 Farm Bill legalized hemp products containing no more than 0.3% delta-9 THC. However, some businesses have utilized other psychoactive compounds within hemp to create products that mimic marijuana, leading to a growing market of intoxicating hemp-derived substances.

Although this market is smaller than the legal marijuana industry, it has expanded significantly since 2018. Analysts note that these products are particularly popular in states where recreational marijuana remains illegal.

Some synthesized hemp derivatives, such as THC-O, exhibit hallucinogenic properties similar to LSD. Businesses are also synthesizing legal delta-9 THC from hemp to create fully synthetic marijuana products.

The Farm Bill, set to expire on September 30, will need reauthorization for these products to remain legal. Meanwhile, 13 states have already banned delta-8 THC, and additional regulations are under consideration.

Health risks associated with hemp-derived cannabis remain under-researched. The FDA’s voluntary adverse event reporting system records approximately 15 delta-8-related cases per quarter. While lawsuits over cannabis product-related injuries exist, delta-8 litigation has primarily focused on purity and labeling issues rather than direct health impacts. A recent class action lawsuit alleges that a manufacturer mislabeled vapes as delta-8 while actually containing excessive delta-9 THC.

Other Emerging Psychoactive Substances and Their Legal Implications

Kratom, an herbal substance with opioid- and stimulant-like effects, has been linked to wrongful death litigation. One lawsuit resulted in an $11.6 million award, and another case seeks over $10 million in damages.

Meanwhile, the trend of micro dosing psychedelic drugs has gained momentum alongside shifting legal policies. Oregon has established a regulated framework for psilocybin services, while Colorado and several major cities—including Detroit, Seattle, and San Francisco—have decriminalized psychedelics.

Since the beginning of the current legislative session, more than three dozen psychedelic-related bills have been introduced across multiple states. However, in a significant regulatory decision last year, the FDA declined to approve MDMA for PTSD treatment. Additionally, local communities in Oregon have voted to restrict access to psilocybin.

As the landscape of psychoactive substances continues to evolve, insurers and legal professionals must remain vigilant to emerging risks and regulatory shifts.