Are these cannabis risks on your radar?

May 12, 2022 / 6 min read

Cannabis, whose distinctive leaf was once a potent symbol of the counterculture, represents a new commercial power today. The cannabis industry reached an estimated $9.1 billion in sales globally in 2020 and experts predict it will reach $70.6 billion by 2028.¹

The expanding marketplace for cannabis and related products derived from hemp can bring new risks and opportunities that Verisk’s Emerging Issues team explored along with students studying risk management at East Carolina University (ECU). This collaboration is part of Verisk’s ongoing effort to help nurture the next generation of insurance talent.

cannabis-risks

Just as vape users were sickened by counterfeit cannabis vape liquid thickened with Vitamin E oil, similar risks come with Delta-8 vape cartridges, which are generally not sold in licensed dispensaries.

From improvements in cultivation and manufacturing to concerns about safety, the students examined factors that may influence the future of the cannabis and hemp industries.

Genetically engineering a changing crop of cannabis

The cannabis plant produces more than 100 different cannabinoid compounds, with some potentially more suited for specific medical uses, including treating insomnia, anxiety, depression, epilepsy, and cancer symptoms. Some cannabis engineering experts are exploring ways to replace the cannabis plant entirely and create genetically modified microorganisms that spew out CBD, THC, and other cannabinoids.² Engineers are also seeking ways to genetically alter the cells within the cannabis plant to produce a larger, high-quality yield to reduce costs.

Bioengineering research and practice can be costly and is primarily conducted by large pharmaceutical companies, typically with the capital to invest in the innovations that aim to provide a competitive advantage in the growing commercial cannabis marketplace.

It’s taken years of research and testing to make progress on producing cannabinoids with yeast, bacteria, and algae; the process involves genetically modifying the genes of yeast, then inserting said genes into the cannabis plant to create an organism that can produce more sustainable cannabis.³

Whether the public will embrace bioengineered cannabis is unclear given consumer resistance to genetically modified foods, which have spurred liability concerns, with consumers raising issues around accuracy in labeling and potential harm.

Cannabis industry makes moves to go green

Cultivating cannabis is an energy-intensive activity since the plants are typically bathed in artificial light for 18 to 24 hours a day.⁴ Growers are starting to switch to more energy-efficient light-emitting diodes (LEDs) rather than the standard high-pressure sodium (HPS) lights, reducing their lighting energy use by up to 50 percent. LEDs, which produce less heat, can also be placed closer to the plants, which can help boost photosynthesis. While initially more expensive to deploy, long-lasting LEDs can deliver cost savings over time.⁵

Another strategy for reducing electricity consumption involves balancing temperature and humidity to require less air conditioning, thus saving energy. Many growers try to limit the relative humidity of vegetative rooms to 70 percent and flower rooms to 50 percent to discourage mildew and fungus growth.⁶ Some growers find that increasing the temperature from the typical 75 degrees Fahrenheit upwards to 80 to 85 degrees can require less air conditioning to create the desired humidity levels.⁷

Tapping into AI for efficient distribution

State cannabis regulations may shift and staying compliant with varying state laws around labeling and other rules can be challenging. Some companies are beginning to take advantage of artificial intelligence (AI) technology to help prevent errors in packing, shipping, and delivery of products.⁸ AI is also being deployed to help ensure online orders are accurate, that the product is delivered, and the retailer is paid correctly. Finally, AI is also reportedly being used to help provide better data security for cannabis operations.

Cosmetics get the CBD treatment

Cannabinoids from hemp are finding new applications in cosmetics, with hemp seed oil being used as a skin moisturizer and potential treatment for eczema, itching, acne, atopic dermatitis, and several other conditions. Research and development into hemp oil’s potential benefits is ongoing, and CBD is likely to become more prevalent in cosmetic products,⁹with any claims on specific benefits likely to raise attention from the U.S. Food and Drug Administration (FDA).

Organic halo effect could help the hemp market

Hemp plants may be particularly susceptible to retaining pesticides since the plants are considered “soil purifiers” that siphon not just nutrients, but also metals and contaminants. Research is underway into when conventionally produced hemp is most vulnerable to pesticide contamination in the growth cycle. Meanwhile, the market for organic hemp is growing amid demand for CBD. The CBD market is expected to reach $18 billion by 2025, with the plant’s fibers employed in automotive, construction, food and beverage, personal care, and textile applications.¹⁰ Consumer preference for organic and natural ingredients in pharmaceuticals is helping boost demand for CBD derived from organically grown hemp, with a corresponding rise in job openings in the hemp industry.¹¹

Counterfeit cannabis is a concern for health

The demand for cannabis vaping pens has opened an avenue for counterfeit products distributed by unlicensed dispensaries and the black market.¹² Loaded initially with tobacco-derived liquid and marketed as an aid for smokers to transition from cigarettes, vape pens have grown in popularity as standalone delivery vehicles for both nicotine and, increasingly, THC.¹³ Counterfeit cannabis vapes have been linked to severe lung injuries.¹⁴ The Centers for Disease Control and Prevention reported thousands of hospitalizations and 68 deaths attributed to vaping with a solid link to Vitamin E acetate.¹⁵

Less well-known, another form of counterfeit cannabis called K2, or “Spice,” is also causing concern.¹⁶This synthetic cannabinoid is sprayed onto shredded plant material and is generally sold as a liquid. Since K2 falls into the category of “new psychoactive substances,” or NPS, it’s reportedly not as regulated as other forms of cannabis, making it easy to sell it online or in stores.¹⁷ The effects of K2 start with more typical cannabis effects, including a relaxed feeling and elevated mood, but aftereffects such as violent behavior and suicidal thoughts have also been reported.¹⁸

New delta variants bring uncertainty

The main compound in cannabis that produces the “high” feeling is Delta-9 THC, but other variations are on the rise, including hemp-based strands like Delta-8 THC and Delta-10 THC.¹⁹ Just as vape users were sickened by counterfeit cannabis vape liquid thickened with Vitamin E oil, similar risks come with Delta-8 vape cartridges, which are generally not sold in licensed dispensaries.²⁰

Moreover, there is uncertainty about the amount of THC within Delta-8, with research showing that just a third of the tested products matched the advertised amount. The remaining materials examined varied from about 10 percent to 100 percent off from the labeled amount. So, buyers of Delta-8 cannot be sure of the actual amount of THC in the product. Similarly, Delta-10 THC is prone to labeling inaccuracies, and due to a lack of both research and regulation, it is unknown as to whether it is safe to use.²¹

Verisk’s Emerging Issues team helps you track cannabis risks

As the legal landscape across the United States changes for cannabis, Verisk is continuing to monitor the issue to help ensure our insurance policy programs remain responsive to the unique risk exposures facing businesses. You can learn more about emerging cannabis risks on the Emerging Issues website's cannabis topics page (ISOnet® login required) or on the Emerging Issues product page.

East Carolina University student contributors: Gabrielle Banks, Cole Jackson, Garrett Leicester, Matthew Mathis, Eric Miller, Lena Stein, Alexis Tripp, and Ami Vaidya.

“Legal Marijuana Market Worth $70.6 Billion By 2028,” Grand View Research, May 2021, <https://www.grandviewresearch.com/press-release/global-legal-marijuana-market>, accessed on April 10, 2022.
Elie Dolgin, “The Bioengineering of Cannabis,” Nature, August 2019, <https://www.nature.com/articles/d41586-019-02525-4>, accessed on April 19, 2022.
“Yeast Produce Low-Cost, High-Quality Cannabinoids, February 2019, ScienceDaily, <https://www.sciencedaily.com/releases/2019/02/190227131838.htm>, accessed on April 19, 2022.
Gwynne Ann Unruh, “Marijuana’s Energy Appetite,” The Paper, April 2021, <https://abq.news/2021/04/marijuanas-energy-apetite/>, accessed on April 20, 2022.
Neil Kolwey, “Getting Into the Weeds: Helping cannabis growers save energy,” Southwest Energy Efficiency Project, December 2017, <https://www.swenergy.org/getting-into-the-weeds->, accessed on April 19, 2022.
Ibid.
Ibid.
“Cannabis packages adapt to consumer preference.” Marijuana Venture. December 2020, <https://www.marijuanaventure.com/cannabis-packages-adapt-to-consumer- preference/>, accessed on April 19, 2022.
Josh Epstein, “4 Bold Predictions for the Hemp Industry in 2021,” GreenEntrepreneur, January 2021, <https://www.greenentrepreneur.com/article/362903>, accessed on April 19, 2022.
Ibid.
Ibid.
James Queally, “Counterfeit Cannabis Products Stoke Black Market for California Weed,” Los Angeles Times, August 2019, <www.latimes.com/california/story/2019-08-25/knockoff-cannabis-products-headache-for-california-legal-weed>, accessed on April 20, 2022.
Katherine Schaeffer, “Before recent outbreak, vaping was on the rise in U.S., especially among young people,” Pew Research Center, September 2019, <https://www.pewresearch.org/fact-tank/2019/09/26/vaping-survey-data-roundup/>, accessed on April 20, 2022.
“Outbreak of Lung Injury Associated with the Use of E-Cigarette, or Vaping, Products,” Centers for Disease Control and Prevention, February 2020, <cdc.gov/tobacco/basic_information/e-cigarettes/severe-lung-disease.html#overview>, accessed on April 19, 2022.
Ibid.
“Synthetic Cannabinoids (K2/Spice) DrugFacts.” National Institute on Drug Abuse, February 2018, <https://www.drugabuse.gov/publications/drugfacts/synthetic-cannabinoids-k2spice>, accessed on April 19, 2022.
“The Effects and Dangers of K2,” American Addiction Centers, June 2021, <americanaddictioncenters.org/synthetic-cannabinoids/k2>, accessed on April 20, 2022.
“Spice/ K2, Synthetic Marijuana,” DEA, <www.dea.gov/factsheets/spice-k2-synthetic-marijuana>, accessed on April 20, 2022.
Emma Betuel, “Delta-8-THC: The Rise and Fall of a Cannabis ‘Wild West.’” Inverse, June 2021, <www.inverse.com/science/delta-8-thc-science-and-controversy>, accessed on April 19, 2022.
Marissa Wenzke, “Is Delta-8 THC Safe? Here’s What the Experts Say,” Leafly, August 2021, <www.leafly.com/news/health/is-delta-8-thc-safe-heres-what-the-experts-say>, accessed on April 20, 2022.
Matan Weil, “What Is Delta-10-THC? Is It Safe?” The Cannigma, August 2021, <cannigma.com/plant/what-is-delta-10/>, accessed on April 20, 2022.