In the stream of commerce that is the marijuana industry, insurers face a unique set of exposures, including loss of crops due to pesticides, mold and other hazardous toxins that can destroy the cannabis plant.
“Investing time and money into a crop and then having it go to waste is becoming more of an issue for growers trying to stay in the industry to recoup their losses,” said Jason Draizin, CEO of MarijuanaInsurance.net. “By building crop insurance policy we can help those new and existing growers protect their investment.” Premiums depend upon the insurer offering coverage.
“Premiums are rated out with sales, what the business is selling and what state the company is selling in,” said Michael Cohen of Holland Capital, an insurance brokerage firm. “We’ve received no claims yet because the vertical is too new. It’s our first year, but inquiries we are getting from marijuana entrepreneurs are robust.”
Because the sale of marijuana is regulated state by state, insurers can draft specific coverage tailored to each state’s marijuana laws. For example, in New York, under the Compassionate Care Act insurers are not required to cover medical marijuana companies.
“Coverage will be a decision that insurers make on a case-by-case basis,” said Leo Shalit, an attorney who represents marijuana businesses in New York. Insurance companies may take advantage of the fact that the Compassionate Care Act was written specifically for the chronically ill. “New York took a cautious position towards legalizing marijuana,” Cohen said. “It might evolve, but for now insurers will be very comfortable offering coverage to medical marijuana businesses in New York because the law is progressive and it has risk management out front.”
New insurance products are emerging to cover a slew of new businesses in both legal and non-legal states as a result of the movement to legalize marijuana across the nation. For example, there is crop insurance for field and hydroponic cannabis growers, traditional commercial insurance that covers dispensary transit, medical malpractice policies for doctors who treat their patients with marijuana, and gap coverage for doctors issuing recommendations rather than traditional prescriptions. “Insurers are looking into specifically adopting their medical malpractice wording to recommendation rather than prescriptions,” said Cohen. “We’re also offering malpractice policies for lawyers that represent marijuana companies.”
Because so many medical marijuana patients register online for home delivery in legal states such as Washington and Colorado, cyber insurance is vital to dispensaries.
“With the online threat of hacktivism growing annually, our cyber policy helps regulate the marijuana industry and protect businesses,” said Draizin. (Hacktivism is when hackers access a website or computer system to communicate a political or social message.) Draizin added, “The only difference in a liability policy for a marijuana business is having to pay more in premiums because of a higher risk factor.”