If California marijuana insurance is a major topic at a wholesaler conference then you know that it is important. California saw over $9 billion in general insured losses last year over the two November wildfires alone. Also, a massive court decision known to as the Dynamex decision is shaking the industry.
The California Wholesaler Association conference is a major conference for insurance agents in the 5th largest economy in the world. California is lacking in cannabis insurance specialists but the industry is ramping up quickly after recreational marijuana became a legal regulated market in 2018. A little over a year later, California is still working out many details and has a long way to go, but the California marijuana insurance business is likely to become much larger.
A number of marijuana insurance agents were present to speak and learn at the conference and spoke with an Insurance Journal reporter. The CEO of one particular insurance company had this to say:
He said most cannabis operators seek the same kind of insurance many businesses want, such as general liability, workers’ compensation, slip and fall.
He said growing facilities with their expensive equipment and sophisticated operations need a lot of insurance.
“We’re seeing high property limits,” he said.
Brown said some businesses have been in operation long enough to have a good loss history, but many operated in grey areas before California legalized adult use, so that history isn’t always a dependable one for underwriting purposes.
Underwriting as a whole for the cannabis industry can be tough, he said, because there are also numerous companies with no loss history at all.
“The business interruption exposure, for example, is a vague and nebulous thing for a lot of startup operators,” he said.
Tatum said that because banks are regulated by the federal government, which still considers cannabis a controlled substance, that many operations have an abundance of cash on hand.
“Finding coverage for the actual cash on the premises has been a problem,” he said.
Quilici said that educating her clients on the ins and outs of cannabis coverage has become a big part of the job, as has educating herself.
“I’ve got retailers that know this business than I ever could, and I’ve got retailers that know nothing,” she said.
Cannabis coverage is essential and it is not surprising that marijuana business owners are looking for the same sort of Directors and Officers insurance, slip and fall insurance and other logical forms of coverage as mainstream industries. California has been the home of illegal marijuana grows since the 1960’s and the idea of getting any sort of marijuana insurance coverage probably never really occurred to growers.
The marijuana industry is growing rapidly and so proper cannabis insurance coverage will be as normal for cannabis companies as any other industry. Cannabis crop insurance is certainly important with the wildfires in that region of the country. Beyond that, normal dispensary insurance, marijuana lab testing insurance and other forms of coverage become that much more important the bigger the California marijuana industry grows.