Getting Insurance in the Cannabis Industry

I’ve been in the insurance industry since 2005 and working with clients in the medical cannabis industry since 2011. The first licensed grower I insured grew 18 plants in his suburban family home for prescribed use. As a consequence of growing his own medicine, he became uninsurable. I found an answer for him and, in doing so, discovered an industry that even today is not fully compatible within the conventional framework of insurance — square pegs, round holes.

While it’s true that insurance has been available to medical marijuana operations for some time, a lack of evolution and scarcity best describe almost all of today’s options. There are many pivotal differences between policies, and not all are created equally! It’s critically important to know that you’re investing in the right coverage and that you understand what it will do and what it will not.

Using the tremendous amount of feedback and everything I’ve learned since 2011, I launched a special program Oct. 1 called Cann-Assure. If you’re a licensed grower, infused product maker, dispensary owner or involved in the pharmaceutical or R&D sector, Cann-Assure is straightforward and made for you.

How do you know your insurance policy is right for you? Consider the following:

  • Description of operations: Cannabis or Marijuana should be clearly listed on your policy. If you see these words without “Exclusion” in the same sentence you’re off to a great start!
  • Annual insurance cost: Let’s say you operate and insure a café and dispensary under the same roof. Ask for a quote on the café for comparison purposes. If you have insurance for both operations on your policy, your quote for the café should be significantly less than the combined total. If the difference is only a few hundred dollars it means your dispensary is not insured correctly, or at all.
  • Policy Exclusions: “Illegal Activities Exclusion” and “Illegal [Drug or Substance] Exclusion

What do these terms mean? Well, they are pretty straightforward. While definitions vary from policy to policy, if you asked for my opinion then searched these terms, I would say they’re fairly accurate:

Illegal Activities Exclusion: Any loss or damage caused as a result of the property being used for illegal activities is not covered. 

Illegal [Drug or Substance] Exclusion: No payment for any claims directly or indirectly caused by, or in any way arising from, any activity connected with the manufacturing, storage, production, growth or distribution of any drugs, illegal substances or narcotics activity including any changes to the insured premises to facilitate such activity, even if you did not know that this was happening.

If after reviewing your policy you have concerns, call your broker and get to the bottom of it by asking good questions and get their response in writing. Some basic questions I’d ask are:

Q: “I’m using my home to legally grow medicine – If there was an accidental fire would there be any problems?”

Q: “If my dispensary employee is injured on the job, or a customer slips and falls… am I liable?”

I think we can agree that educated and informed people have the necessary tools to make better choices so when it comes to current risk management for your operations you needn’t be held hostage by yesterday’s thinking. If you don’t have insurance, shop around, kick a few tires and see what’s out there!

There’s a big difference between choosing to be without and choosing not to ask the question.