Distinct aspects of the cannabis industry separate it from other types of business, however, all business includes elements of protection and preservation. Just as banking has been a thorny subject, cannabis insurance held the same reputation until recently. Today, however, the ability to obtain coverage for all divisions of the industry is less convoluted. Diligence is still key, however, when reviewing policies. National Cannabis Insurance Services partner, Mike Bush, says exclusions and gaps are found in many dispensaries’ insurance quotes, due to the uniqueness of the industry.
As examples of exceptionality, some cannabis-related businesses share the same general liability and other risks agricultural and manufacturing businesses face. Other marijuana businesses are especially prone to fires, from both wild and internal sources, while more still face the biggest risks when it comes to theft, general liability and product liability. Further, seed-to-sale technology is required by every state, with both medical and recreational products being traced back to each state’s regulatory divisions, and all businesses must keep in compliance when maintaining a license to operate, per the laws of their individual state.
Coverage for Different Aspects of the Industry
Coverage from existing cannabis business insurance companies is designed to cover cultivators, extractors, product specialists, dispensary owners and budtenders, as well as specialties such as bakeries, consultants, laboratories, medical offices and chefs within the industry. Some states require specific coverage; be sure to check local laws. Here is a breakdown of a few coverage options, in addition to general liability:
- Crop Coverage
- Equipment Coverage
- Product Liability
- Technology Errors & Omissions Coverage
- Property Insurance
- Cyber Liability
- Inland Marine
On March 18th, a bipartisan bill was refiled in the Senate which would give state-legal marijuana businesses greater access to insurance coverage, and protect the companies who offer those plans from federal regulators penance. Titled the Clarifying Law Around Insurance of Marijuana (CLAIM) Act, the bill would prohibit penalizing insurance providers for simply covering those businesses, and it would bar insurers from terminating or limiting policies for marijuana companies or ancillary businesses due to the nature of their enterprise. Further, it would ban “recommending, incentivizing or encouraging an insurer not to engage in the business of insurance in connection with a policyholder, or downgrade or cancel the insurance offered to a cannabis or cannabis-related business,” a summary of the legislation states. The newly filed version of the insurance bill includes additional language not found in the prior bill, such as an expanded definition of what constitutes a cannabis-related business and a financial service.
Educational Resources for Cannabis Insurance
Michigan cannabis business hopefuls looking for insight can turn to cannabis insurance agency MFE Insurance for assistance. The agency has recently released a new educational resource that explains details of Attestation J, which is part of the state application process to become a licensed cannabis company. Additionally, the Attestation J is signed by the company’s insurance provider, attesting coverage includes at least $100,000 of coverage for handling claims of bodily injury made by lawful users of adulterated marijuana. In early March, M.J. Hall & Company, a wholesale insurance brokerage covering the western United States, announced they are now the only wholesaler to have access to the first admitted carrier for cannabis in Arizona, Cannabis Businessowners Policy (CannaBOP). Previously available only in California, this expansion into the Grand Canyon State offers a new opportunity for cannabis business owners, including property limits up to $10 million in total insured values, $1 million in cannabis stock, up to $2 million in business income and up to $1 million in limits for products liability.
Having adequate coverage is essential, as is handling the process in a savvy manner when issues arise. In good times, maintain files with photos and documentation. Then, after loss has occurred, document every possible affected element and immediate review insurance coverage. Request assistance from your insurance broker, if need be. Remember insurance companies are for-profit businesses, designed to make money by collecting more in premiums than they pay out in claims. If a claim is denied at first, keep trying. “Don’t take no for an answer,” said Robert Finkle, a California-based attorney who has dealt with several marijuana businesses’ insurance claims in court. Overall, patience is a must, as insurance dealings are notoriously slow, regardless of the industry.
Cannabis business insurance is one of many topics addressed at CannaCon, the nation’s leading business-to-business cannabis conference. Through our commitment to growing the cannabis industry by educating cannabis business owners on all things related to cannabis and CBD, our trade shows feature a smorgasbord of exhibitors from around the country as well as seminars delivered by industry experts.