With federal regulations hindering traditional insurance, Würk CEO Deborah Saneman unveils new captive offerings to help the legal cannabis industry in the US secure employee benefits
Securing employee benefits has been a major challenge for the legal cannabis industry, as federal regulations limit access to traditional insurance options in the US. Würk, a human capital management provider, has recently launched the employee benefit captive programme to address this issue.
"We are revolutionising how cannabis companies manage employee benefits," says Saneman. "Our programme allows employers to control their insurance costs while maintaining quality benefits for their team members."
Partnering with The Baldwin Group, the new initiative enables cannabis businesses to establish their own insurance entities, granting them unprecedented control over coverage and costs unattainable through traditional insurance plans.
Built for evolution
Research firm Brightfield Group projects that as demand continues to rise dramatically, legal annual cannabis sales in the US will surpass US$31.8 billion in 2023, and reach US$507 billion by 2028. Currently, 38 states and Washington DC have legalised some form of medical marijuana, whereas recreational marijuana is legal in 24 states, three US territories, and Washington DC, indicating a significant shift in state policies.
However, the Controlled Substances Act (CSA) still classifies cannabis as a Schedule I drug, rendering it illegal at the federal level. Conflicting federal and state laws, a shifting regulatory landscape, and the lack of standardised business practices have created a complex legal environment for cannabis businesses, deterring many insurers from entering the market.
As a result, cannabis-related businesses often face significant challenges in securing affordable and comprehensive insurance coverages.
Amid these obstacles, Würk has undergone a dynamic rebranding journey over the past nine years, mirroring the transformative evolution of the cannabis industry itself. Initially navigating a fragmented market with inconsistent regulations, Würk recognised the need to adapt and innovate alongside its clients to address the sector's unique challenges.
"Our refreshed brand is shaped by the insights we have gained from working with businesses in 46 states across more than 5,100 jurisdictions," says Saneman.
"Rooted in revolution and built for evolution, we have evolved to meet the specific challenges and opportunities of this sector, leveraging our passionate team and proprietary insights to offer customised solutions."
One such innovation is Würk's compensation benchmarking tool, launched earlier this year. The initiative leverages the wealth of knowledge within Würk's extensive cannabis dataset, providing valuable insights and aggregated metrics across hundreds of employers and tens of thousands of employees.
The robust data and visualisation platform not only helps businesses understand industry standards but also, as Saneman notes, "sets the stage for the development of future products aimed at addressing our clients' most pressing business challenges".
Breaking new ground
Industry experts have acknowledged the difficulties in insuring cannabis businesses. The underwriting of these risks is unique due to the high value of the products, their intoxicating nature, and their relative novelty. Cannabis companies often operate under far more stringent regulatory regimes than those outside the industry, which inherently mitigates some of their operational risks.
In addition, the federal classification of cannabis as a Schedule I drug under the CSA creates conflicting federal and state laws, discouraging insurers from entering the market. This leaves cannabis-related businesses struggling with higher premiums, limited coverage, and often cash-only operations due to banking restrictions.
In this context, captive insurance offers a viable solution to these challenges. By allowing businesses to self-insure, captives provide coverage for risks that are not available or are prohibitively expensive in the commercial insurance market.
Under Würk's new programme, each captive tailors to a client's specific risk profile by establishing a stable risk pool with premiums set by an underwriting team. This method offers greater flexibility and long-term stability compared to traditional insurance plans, leading to reduced operating costs, underwriting adaptability, enhanced control over claims, and improved cash flow.
"This is particularly suited for cannabis businesses due to the demographics of the cannabis workforce," notes Saneman.
"These companies frequently have younger employees and more single workers, which tends to drive lower claims trends." In traditional fully insured risk pools, employers with favourable demographics often subsidise those with higher ages and more dependents."
A standout feature of the programme is the use of predictive risk scoring and 12-month forward-looking claim projections. These tools assess the health risks of a company's employee population and forecast potential claims, enabling businesses to anticipate costs rather than react to them.
Predictive analytics enable cannabis companies to better manage health insurance costs by providing clear insights into future healthcare expenses, according to Saneman. "When employers receive a risk score and claim forecast, they can more effectively determine whether the employee benefit captive is the right option," she explains. This proactive approach enables companies to allocate resources more efficiently and design benefit plans that are both cost-effective and sustainable.
By giving businesses greater control over employee benefits and insurance costs, the programme addresses a critical need in an industry known for high turnover rates. "Offering more competitive and stable benefits packages directly impacts employee retention and satisfaction," says Saneman. "Employees feel valued and more secure in their positions when they have consistent health coverage and benefits at lower, predictable costs."
This strategy helps reduce turnover and contributes to a more motivated and loyal workforce — a significant advantage in a sector that added nearly 23,000 jobs last year and now employs over 440,000 people in the US, according to recent reports.
A path forward
With ongoing discussions about federal legalisation and the potential rescheduling of cannabis, many wonder how these changes might impact Würk's programme. Saneman remains both optimistic and prepared.
"The potential federal legalisation or rescheduling of cannabis could have a significant impact, but our employee benefit captive programme would still remain highly valuable," she asserts.
"Even in a post-legalisation landscape, we offer tailored, flexible benefits and greater control over costs that traditional insurers may not match."
Würk closely monitors developments and is prepared to adjust its offerings to meet evolving compliance requirements. "Our focus is on ensuring that the programme continues to provide cannabis businesses with an optimal solution — one that is adaptable, cost-effective, and designed to meet their unique needs, even as regulations change," Saneman adds.
Looking ahead, Saneman anticipates future trends in workforce management within the cannabis sector, including a shift toward personalised benefits, employee well-being initiatives, data-driven insights, and navigating increasing regulatory complexity.
"Würk is innovating to stay ahead by enhancing our employee benefit captive programme with more flexible and tailored solutions," she explains. "We are integrating wellness and retention tools and leveraging predictive analytics to manage costs."
In an industry riddled with unique challenges, innovative solutions like Würk's captive offerings are paving the way forward. By allowing businesses to actively manage their risks and tailor coverage to their specific needs, Würk is filling a critical gap left by traditional insurers and helping the industry grow.
"In the current cannabis market, there are a wide range of benefits that a captive could bring to a business," Saneman notes. "From providing coverage that's otherwise unavailable to setting premiums based on the business's own loss data, captives offer a level of control and customisation that's crucial for our industry."
By offering alternative solutions to cannabis businesses, Würk's programme is opening new avenues for the industry. "We're committed to supporting cannabis businesses every step of the way," Saneman affirms.
"By empowering them with the tools and solutions they need, we are not just helping them manage growth — we are helping them lead the way."
