Despite the fact that it’s a multi-billion dollar industry, many of the largest US insurers are taking a pass on providing insurance coverage to marijuana businesses.

Allianz SE, Hartford Financial Services Group Inc., and Nationwide Mutual Insurance Co. are among the largest insurers in the world, and each of them is refusing to provide coverage to marijuana-related businesses.

The insurers are taking a pass on covering marijuana businesses even though US states are increasingly allowing the use of the drug for medicinal or recreational purposes. Yet, the US federal government in Washington, D.C. remains steadfast in keeping marijuana illegal.

Industry analysts say that it is the fact that marijuana remains illegal at the federal level in the US that’s keeping big insurers on the sidelines and leaving smaller insurance firms to provide insurance coverage to businesses that deal in marijuana and cannabis products.

Some US lawmakers who are eager to reap tax revenue from marijuana outfits, as well as investors eager for profits, are taking issue with the fact that many insurers won’t engage with marijuana companies. Despite the criticism, the insurers are holding the line on pot.

“The whole conversation of cannabis crosses the desks of the most senior leaders of the insurance community as they determine whether or not they want to play in this game,” Tom Fitzgerald, Global Broking Officer at insurance broker Aon PLC, told Reuters news agency. “There’s not every insurance company in the world anxious to write this stuff, at least not yet.”

Still, marijuana is big business in the US, with consumer spending on legal cannabis products estimated to reach US$11 billion this year and forecast to hit US$23 billion by 2022, according to a June report by BDS Analytics. Recreational use of marijuana is now legal in nine states and Washington, D.C., while medicinal weed is permitted in more than 25 states, according to the National Conference of State Legislators.

In terms of the insurance being sought by marijuana businesses, growers want protection against crop loss and other business coverage, while distributors and retailers need insurance to cover everything from theft and fire to employee liability. Most US banks won’t allow marijuana companies to open accounts because of the federal restrictions on pot, and now they’re finding it difficult to buy insurance as well.

One of the smaller insurance firms providing coverage for marijuana companies is Continental Heritage Insurance Co. based in Ohio. The insurer also sells surety products such as bail bonds, and has a license in California to offer coverage for marijuana-related businesses, including product liability.

Analysts say that as more US states legalize marijuana, more carriers will likely come into the market. And a new large market will open up later this year when recreational marijuana becomes legal in Canada on October 17. As the industry matures, insurers will have access to more stats such as loss histories to help them make underwriting decisions.