The cannabis industry is centered around agriculture and the ability to grow and cultivate marijuana plants. Cannabis crop insurance is a way to protect this particular type of agriculture. The results of cannabis agriculture produces various edibles, oils, and flowers people use to consume cannabis for medicinal or recreational purposes. In order for any of the previous mentioned applications to exist, there must be a crop that produces a yield to put into market. If you produce a crop that can potentially turn a profit, you will need insurance, cannabis is no different, thus marijuana growers should have cannabis crop insurance.
As the cannabis market expands and more underwriters and insurers become willing to take on the risk despite the Schedule 1 status of marijuana, opportunities for risk management will grow. Cannabis crop insurance may sound like an unnecessary expense to a cultivator in their early stages, but insurance cannot be overlooked. Imagine investing a portion or all of your life savings into starting a grow operation only to lose it all to a fire. There are many in the industry who have experienced such loss, but there are also others who were able to protect themselves and their investment with a sound risk management strategy.
One Carpinteria farmer won an insurance payout well in excess of $1 million after ashes from the Thomas Fire destroyed thousands of his plants. What was unusual was that the plants were marijuana. As cannabis cultivators come out of the shadows, pot businesses are starting to operate like any other businesses — they have lawyers, accountants, bankers, and, more recently, insurance brokers. Most of the Northern California cannabis farms scorched by last fall’s wildfires did not have insurance. They were forced to suffer huge losses. But now insurance brokers in Santa Barbara County are starting to tap into the once-illicit industry.
There are many growers that suffered massive losses that prevented them from competing in the cannabis industry again. While a marijuana grower with a cannabis crop insurance policy may still experienc some losses, because of their cannabis crop insurance policy they are able to significantly reduce that loss. As a new business owner you risk severe exposure to financial loss if unforeseen risks are not accounted for in some capacity. For a grower or a business owner with a grow operation, cannabis crop insurance should be explored with a knowledgeable insurance agency that can help you decide what policy is right for you.
Growing marijuana, regardless of whether a grow operations is outdoors or indoors, is no different than any other crop in the sense that the variables of nature such as fire, storms, earthquakes, or other natural disasters must still be accounted for. Because we can’t predict these various perils, risk management policies exist to help fill the void of the unknown. It is also important to remember that regardless of what type of cannabis crop insurance policy you have, coverage limits will apply. You must read your policy with both your agent and your attorney to determine what your coverage consists of. As a business owner, if you are going to invest your time and money into an endeavor such as a cannabis grow operation, it only makes sense to protect that investment against the unforeseen.