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As the cannabis industry continues to evolve, so do the products available to consumers. One area receiving significant attention in 2025 is the distinction between THC and THCA. While THC (tetrahydrocannabinol) has long been at the center of cannabis regulation and insurance considerations, THCA (tetrahydrocannabinolic acid) is now creating new opportunities—and complexities—in the legal and insurance landscape.
THC is the psychoactive cannabinoid responsible for the “high” experienced by cannabis users. Conversely, THCA is the non-psychoactive precursor to THC, typically found in raw cannabis plants. When heated—a process known as decarboxylation—THCA converts into THC. This chemical change has significant implications for legality, consumption, and commercial insurance.
In the United States, cannabis regulation is primarily centered on THC. Under the 2018 Farm Bill, cannabis plants containing less than 0.3% THC by dry weight are classified as legal hemp. However, the bill does not explicitly address THCA levels, resulting in a legal loophole exploited by many hemp producers and retailers.
As of 2025, numerous cannabis businesses sell hemp-derived products labeled “THCA flower,” legally marketed because their THC levels meet federal requirements at the point of sale. However, once these products are heated or consumed, they convert into THC, effectively circumventing federal THC regulations. This gray area leaves businesses operating in uncertain legal territory.
The uncertain regulatory status of THCA presents unique insurance challenges. While insurers are becoming more comfortable covering businesses dealing explicitly with THC, the nuances of THCA introduce complexities:
Product liability coverage becomes tricky with THCA products due to their transformation into THC upon heating or consumption. Insurers may debate liability if legal challenges arise from products marketed as federally compliant yet psychoactive once used. Businesses should clearly communicate to insurers precisely what their products contain and how they are consumed to secure appropriate coverage.
General liability coverage may also be affected. Dispensaries or hemp retailers selling THCA products could face potential lawsuits alleging misleading advertising or improper labeling. Explicit transparency in labeling and advertising practices is essential to maintaining coverage and avoiding liability gaps.
Crop insurance policies typically consider THC concentration when evaluating claims. Due to THCA’s conversion into THC, cultivators must clearly document THC and THCA levels in raw plant material to prevent coverage denials or disputes.
As state and federal regulators clarify their stance on THCA, businesses may face increased regulatory scrutiny, fines, or even criminal charges. Securing coverage that includes legal defense and compliance-related expenses can be vital for protecting businesses navigating this evolving legal framework.
Cannabis businesses dealing in THCA should proactively implement risk management strategies:
The cannabis industry urgently requires regulatory clarity regarding THCA. Businesses operating within this legal gray area risk potential litigation, compliance issues, and insurance coverage gaps. Clearer federal guidance and uniform state regulations would significantly simplify insurance underwriting and policy creation, providing greater stability and predictability for cannabis businesses nationwide.
Navigating the insurance landscape in the cannabis industry requires careful planning and specialized expertise. Cover Cannabis can help businesses stay ahead of regulatory changes and secure comprehensive insurance coverage tailored to unique cannabis risks.
Ready to safeguard your cannabis business against the evolving risks surrounding THCA and THC products? Contact Cover Cannabis today for personalized insurance solutions designed specifically for your needs.
Nicole Bill is a Commercial Insurance Specialist at Cover Cannabis. A graduate from Humboldt State University with a Bachelors of Science in Business Administration. Nicole began her professional career in Banking and Investments, helping people invest for their retirement through Life Insurance and Annuities. Nicole was drawn to the insurance space because she saw an opportunity of growth and help business owners through the confusing aspects of insurance, specifically in the Cannabis industry.
On her time off, Nicole enjoys playing with her kids and gardening.