Cannabis Insurance is a requirement for any business operating in the marijuana industry, hemp industry or any cannabis ancillary business to mitigate risk and as an investment. S2S Insurance Specialists LLC is an international insurance intermediary and brokerage firm, specializing in the placement of insurance and other risk insurance services to businesses operating in the Medical And Recreational Marijuana Industry.

Marijuana Delivery Robberies Becoming Commonplace

Since banks remain reluctant to work with marijuana dispensaries, the industry remains burdened with cash for the most part. Needless to say, the liability to cannabis companies that are holding large amounts of cash are obvious. Marijuana delivery robberies are becoming very commonplace in places like California.

In one town close to San Francisco called Concord, police are reporting marijuana delivery robberies are as frequent as four times a month. It only makes sense for these cannabis dispensaries to find the right sort of marijuana coverage to protect against these robberies. Lt. Mike Kindorf with the Concord Police Department recently spoke to reporters concerning these marijuana delivery robberies.

marijuana delivery robberies are on the rise and cannabis product liability is very important

“There’s a significant increase and talking with other law-enforcement agencies,” Kindorf said. “I know that Concord is not alone in that crime trend that it’s occurring in other parts of Contra Costa County as well.”

Because cannabis is still illegal in the eyes of the federal government, California pot sellers are stuck dealing in cash for the most part, which is luring in the criminal element, even more than the drugs.

“In a few robberies that we have they’ve targeted cash and not even touched the marijuana,” said Kindorf.

In December, a driver showed up for a drop off in the parking lot of the Bank of America near the Sun Valley Mall and was robbed by a handgun wielding suspect.

The thief grabbed both the pot and the cash but police later found a duffle bag stuffed with pot products abandoned by the side of I-680.

Concord Police believe that it’s a crime that’s underreported and even in the cases where police are called in, the victims often don’t want to cooperate.

“Even though it’s legal it seems to be a little bit of an off the grid business,” Kindorf said. “It’s kind a virgin territory that we’re in for sure.”

For instance in that armed robbery that happened near the Sun Valley Mall, police have a suspect but they’re having a hard time getting the victim to call them back so we can make a positive ID.

The financial risks associated with owning a marijuana company are made particularly obvious by so much cash being present. Cannabis product liability and insuring against theft is essential considering how often these marijuana delivery robberies are occurring. Reach out to S2S Insurance Specialists, Eric Rahn and David Rahn with any questions.

Read more at Kron4.com

Cannabis Insurance and Understanding Tax Code 280E

Since there are so many risks associated with owning a cannabis company that handles the actual marijuana plant, it is essential that a cannabis entrepreneur understand all of their alternatives for protecting their assets. Cannabis insurance is an obvious necessity but also understanding Tax Code 280E completely is very important.

Tax Code 280E keeps a marijuana company from writing off normal business expenses making it very challenging to turn a profit. The Schedule I status of marijuana makes it a controlled substance that falls under IRS Tax Code 280E, but here are some ideas on how a cannabis company can try and maximize their profits.

tax code 280e keeps marijuana companies from writing off normal business expenses which is why they need cannabis coverage

Have you ever wanted to give or receive a large gift (birthday, graduation, wedding) in advance of the event? That is what engineering-based cost segregation can do for the entity that owns the commercial real estate and leases it to the cannabis operation. It is essentially a benefit that comes sooner than it otherwise would, hence the phrase accelerated depreciation.

Four IRS-approved methods of preparing a cost segregation study exist. Typically, the engineering firm assessing the building will select the method it will use to do the evaluation. Each method can generate different results toward achieving greater immediate tax savings by creating a positive time-value-of-money (compounding) benefit for the property owner. “Engineering Actual” is the gold standard of cost segregation studies, as it line-items each component as a reference point for defense of the depreciation calculation. It often yields the largest benefit in the cost segregation process, but can also be the most expensive engineering study.

Owners of commercial real estate leased to cannabis operations can elect to charge rent at the higher end of the local market range in order to capture more profit and available tax savings in the real estate ownership entity, instead of retaining additional profit in the more highly taxed cannabis operation. To achieve a financial benefit that is larger than the costs of an engineering study, most businesses will use engineering-based cost segregation for commercial real estate that has an acquisition cost in excess of $500,000, or for existing real estate renovated at a cost in excess of $250,000, which is a low barrier to entry.

Attaining D&O insurance for your marijuana business, cannabis theft coverage, marijuana product liability insurance and more may be the most efficient way to protect your company from liabilities. Reach out to either Eric Rahn or David Rahn at S2S Insurance Specialists.

Read more at CannabisBusinessTimes.com

Michigan Contaminated Caregiver Medical Marijuana Recalled

In January, 50 pounds of medical marijuana produced by mostly Michigan caregivers was recalled after it was discovered that it was contaminated with E. coli, arsenic, salmonella and cadmium. Marijuana lab test facilities are mandated in almost all states that have legalized medical cannabis with the exception of states like Oregon.

Heavy metals, microbials and other toxins are commonly found in marijuana, making cannabis lab testing facilities a necessity. In states like Michigan, cannabis testing facility insurance is advisable since the science behind testing for toxins and potency require sophisticated equipment like spectrometers.

failed medical marijuana in michigan gets recalled reinforcing the need for marijuana insurance

The Medical Marijuana Licensing Board is allowing licensed facilities to continue purchasing caregiver-produced product through March 31 to close a supply gap. Registered caregivers have been supplying a limited number of patients for about a decade.

Patients must sign a release if they purchase caregiver-produced marijuana, said David Harns, a spokesman for the state Department of Licensing and Regulatory Affairs.

“The products will not be required to have met state testing standards, so patients need to understand that fact and assume the potential risk that the products may present,” he said.

Patients can have the products examined at a safety compliance facility, Harns said.

The Michigan Coalition of Independent Cannabis Testing Laboratories, which is made up of licensed testers, growers and processors, said the selective enforcement of safety regulations doesn’t ensure patients have access to safe medical marijuana.

“Under this new ruling, Michigan’s most vulnerable patients are buying purported medical cannabis products that could legitimately harm them,” the group said in a statement.

Marijuana product liability insurance and cannabis lab testing facility insurance is very important in order for companies to have the coverage to survive setbacks. The cannabis industry is still in its infancy and while the industry waits for federal marijuana reform, cannabis companies need all the back up they can get. Reach out to David Rahn or Eric Rahn with S2S Insurance Specialists to find out about all of your marijuana insurance needs.

Read more at WoodTV.com

Marijuana Law Professional Discusses the Growing Need For Cannabis Coverage

marijuana law professional discusses the growing need for cannabis insurance coverage

The demand for cannabis insurance specialists is increasing as general awareness spreads about medical marijuana and the legalization wave continues across the country. One marijuana law professional, Ian Stewart from Wilson Elser Moskowitz Edelman & Dicker LLP, has been speaking at conferences frequently discussing the growing need for cannabis coverage.

Stewart has talked about the need for cybersecurity insurance in the cannabis space considering the vast amounts of data that is being collected from seed-to-sale programs and medical marijuana programs. He has also touched upon the potential of cannabis product liability claims from untested or improperly packaged marijuana products. In an interview by the Insurance Journal, Ian Stewart expounded on some more cannabis business related risks he is foreseeing.

cyber security is a significant risk for cannabis companies and marijuana insurance is becoming even more important

Insurance Journal: What sort of unique or interesting claims do you think that we’re seeing, expect to see, or are we seeing from these cannabis coverages?

Stewart: However, I think that the sort of unspoken danger that a lot of certainly the licensed operators don’t appreciate is the risk of consumer class actions. You know, basically there are cases where a consumer will come in and they’ll by a product that is technically adulterated or mislabeled or contaminated in some way, maybe they’re violating some state regulation, and the state cannabis regulations are really onerous. It’s really hard for operators to be fully compliant.

So, the trick is these lawyers will find a product that is in some way violating a state regulation and then file consumer class action under state consumer protection laws. Frequently those are uninsured or under-insured claims, and they’re dangerous because they have fee shifting where the attorneys can get their attorney’s fees, there’s statutory damages, disbursement of profits. They’re pretty dangerous, and we’re starting to see those get filed now in California and elsewhere.

Insurance Journal: You mentioned something in your talk (at PLUS) about doctors looking for coverage for prescribing marijuana and that you expect that to pick up. How do you see that picking up? Where do you see these doctors going to find coverage, and what sort of coverages are they going be looking for?

Stewart: We’re seeing more and more issues of interactions, you know, overlay where in the past it may have been a patient who just has a drug history of marijuana and cocaine. But now that patient may be adding CBD or marijuana to their panel of medications, and maybe there’s overlay with mental health issues or substance abuse. So, it can be really difficult for physicians now to tread those waters, get informed consent, adequately advise their patients, and in some cases even offer CBD or marijuana instead of opiates, for example.

While access to traditional forms of insurance is a little more limited for cannabis business professionals, as long as you connect with the right cannabis insurance specialists, very good alternatives exist for you. Contact Eric Rahn or David Rahn of S2S Insurance Specialists to find out more.

Read more at InsuranceJournal.com

Seeking State Marijuana Grow Licenses Highlights the Need for D&O Insurance

marijuana grow licenses are hard to come by and one particular lawsuit in las vegas shows the need for cannabis insurance

The battle to win marijuana grow licenses in states like Nevada have resulted in some very aggressive legal challenges. One such example in Las Vegas highlights the advantages of having cannabis D&O Liability Insurance coverage.

Michael and Robert Frey are joint owners with Verano Holdings of a 50,000 acre cannabis cultivation and processing facility in Nevada called Naturex which runs the Zen Leaf dispensaries in Las Vegas. Verano Holdings is one of the largest cannabis companies in the country with marijuana grow licenses in multiple states.

According to case filing, the Frey brothers are saying that they completed paperwork for additional grow licenses in Nevada and gave it to Verano to submit. Verano is accused of using the paperwork completed by the Frey brothers as a reference to then completing separate paperwork which they filed with Nevada to get their own licenses independent of the Frey brothers.

directors and officers insurance is important in case your cannabis company gets sued

Verano CEO George Archos said the company is aware of the complaint but has not had an opportunity to review the claims.

“Based on what we know of the allegations, however, we do not believe the complaint has merit,” Archos said in a statement to the Las Vegas Review-Journal. “We intend to defend aggressively against these claims.”

“Defendants claimed the applications would be incomplete without locations specified in the application materials — albeit an incorrect analysis and unsubstantiated excuse proffered by Defendants — to which plaintiffs reasonably relied on such misrepresentation at the time,’’ the lawsuit states.

Verano “intentionally and maliciously usurped the opportunity available and belonging to Naturex and instead utilized the Naturex materials for its own entity defendant Lone Mountain to apply without including plaintiffs and without informing plaintiffs of defendants’ intended course of action,” the lawsuit states.

The actions of officers and directors of any company can lead to lawsuits that D&O Liability insurance is intended to protect a company from. Marijuana legalization is spreading fast and investors are clamoring to get a foot hold so they can prosper from the quickly growing industry. Finding the right sort of liability coverage in the cannabis can be tough though, so get in touch with David Rahn or Eric Rahn of S2S Insurance, your cannabis insurance specialists, to find out your alternatives.

Read more at ReviewJournal.com

Landlords Need The Right Insurance Before Leasing to Cannabis Grows

All sorts of insurance is necessary for cannabis grows, but landlords leasing out to a marijuana grow facility also need to consider whether they have the right sort of marijuana insurance coverage before signing contracts. Due to the illegal status of marijuana federally, being involved in a business that touches the actual plant violates many contracts.

There is a lot to consider when accepting cannabis grows as tenants. Liabilities from the fire hazards involved with all of the lighting and energy used is a very real risk. If the cannabis grows are also extracting concentrates like cannabis oils, a lot of volatile and heavy equipment is often used.

understanding the financial risks of having cananbis grows as tenants

Typically, a landlord has already entered into many business relationships and documents pertaining to its property, years before contemplating leasing to a cannabis facility. The landlord has likely executed financing and insurance documents, which may be jeopardized by a cannabis lease. As discussed below, a landlord may inadvertently breach provisions in those documents by executing a lease for a cannabis facility.

The loan documents were probably executed well before it was ever envisioned that marijuana (whether medicinal or recreational) would be legal under various states’ laws. Those documents may very well contain a provision noting that the landlord/borrower will not use the property in connection with any illegal activity. As the cultivation and use of marijuana are illegal under Federal law, the mortgagee has an argument that leasing to a cannabis facility automatically breaches the loan documents.

Another possible concern relates to insurance policies. The landlord will generally hold various types of insurance policies related to property damage and liability. Those policies very likely have language excluding or limiting coverage for illegal or non-permitted activities. Therefore, those policies should be thoroughly reviewed and modified through endorsement to ensure full and adequate coverage.

If you are considering taking on cannabis grows as tenants, reach out to S2S Insurance. Eric Rahn and David Rahn stand by to address any questions and make you aware of your alternatives as a landlord to a marijuana grow.

Read more at The National Law Review

California Marijuana Insurance Big Topic at Wholesaler Association Conference

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.

cannabis insurance specialists are more important since so few people involved in the business of marijuana understand their alternatives

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.

California marijuana farms have been around illegally since the 1960's but now that cannabis is legal marijuana crop insurance is important

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.

Read more at InsuranceJournal.com

The Evolution of the Emerging Cannabis Industry

Opinions on the emerging cannabis industry are so numerous that they are beyond my ability to track them. Everyone is either claiming to be an authority on the business of legal marijuana, or are striving to become the authority. The truth is that nobody is a complete authority on legal cannabis. It is still too new of an industry, and the proof is how inconsistent the rules and regulations pertaining to marijuana/hemp/CBD vary from state-to-state, and within each state!  One moment Michigan has a restricted medical marijuana program, the next moment they have legalized adult-use marijuana. How can anyone be an authority, when fragmented state and federal regulations continue to evolve?

You should all know by now the largest barrier to entry into this industry is the Schedule 1 status of cannabis. This particular legal barrier unavoidably looms in our background everyday. Attending B2B cannabis conferences, from smaller more intimate ones such as C-LAB events to massive conferences like MJBiz, I consistently listen to speakers, vendors and attendees bring up the same topics. All of these cannabis conferences serve to educate and communicate, but no matter where I go people still talk about banking restrictions, merchant service problems, taxes being too steep to turn a profit due to IRS Tax Code 280E, inability to engage in interstate commerce and all sorts of marketing challenges. For us of course, it is the barriers to suitable marijuana insurance policies that we focus on the most.

How long does it take for a state regulated body to be funded, staffed, implemented, grow and stabilize? Depending how fast current laws are adopted or changed, it will take a long time and a lot of discussions as to how the cannabis Industry, the federal government and the cannabis approved states will come together to implement best in class licensing and regulations, product quality standards, taxation and enforcement. Through this evolution of an industry, we will witness successes and failures along the way.

Look at Massachusetts, voters legalized adult-use marijuana in 2016, and it took over two years for sales to begin with only two dispensaries allowed to open by December of 2018. Florida has multiple lawsuits filed over unconstitutional medical marijuana laws that do not match what voters approved in 2016. State laws are changing on a regular basis and have not even stabilized in states like Colorado and Washington which began selling adult-use cannabis in 2014 and medical marijuana well before that.

The evolving marijuana industry is full of so many financial and regulatory uncertainties that insurance policies for cannabis companies are not consistent from one carrier to another. Marijuana insurance companies like S2S Insurance Specialists have to stay current with many state and federal regulations. Federal prohibition continues to plague the cannabis insurance industry by preventing it from operating in a free market environment. These restrictions have made most big insurance companies reluctant to enter the cannabis market place, therefore we are restricted to a couple of surplus lines carriers.

Best practices in business are still evolving in the cannabis space. The time for cannabis entrepreneurs to build, scale and stabilize their businesses is now! We have all read and heard about the growth projections of the cannabis industry. Projections that cannabis will represent the next $20 billion industry are probably conservative. We will eventually rival the multi-billion dollar snack, alcohol and pharmaceutical industries. As companies scale up, management teams become the forefront of any successful operation.

Most professionals I have met have pivoted into the cannabis Industry from other specialized professions. Like myself, they see an opportunity to do something new and exciting. We need to bring the best of our skill sets to this very young and emerging industry. Come into this industry with your eyes wide open. The opportunities in cannabis are great, but the competition is fierce. It takes more than just a love of marijuana or the passion of wanting to see the social injustice of marijuana prohibition come to an end. It takes a strong understanding of the fundamentals of business. It takes organization and constant research to understand the next big trend or new state mandated rules.

As cannabis insurance specialists, David and I stay current on industry trends, data points,  cannabis research and the full spectrum of the supply/distribution chain. The biggest problem we all face in this young emerging industry is the lack of credible and actionable data. Like most institutional markets, insurance relies heavily on the data acquired across the industry in order to rate, compare and assess risk. We also follow current industry news and insurance trends in cannabis.

The most recent industry change was the passing of the2018 Farm Bill. It allows for broad cultivation of hemp, not simply pilot programs for studying market interest in hemp-derived products. Its language clearly allows for the transfer of hemp-derived products across state lines for commercial use and other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in a manner consistent with the law.* Now that hemp will be descheduled, along with hemp derived CBD, hopefully insurance for these products will be more widely available and competitive. There is hope that states will offer state sponsored crop insurance for hemp growers.

Another big trend we are seeing is the need for companies to raise capital for future growth. Many cannabis companies are looking towards the Canadian stock exchanges such as the TSX, VSE and CSE to raise funding. When companies engage in selling shares of stock to the public, there is a greater need for Directors and Officers Liability insurance (D&O). A Directors and Officers Insurance policy protects you as a director or officer of the company if your actions negatively affect the company’s profitability or if the company is sued because of your actions. The policy will pay for legal damages and fees. D&O helps preserve the company’s cash flow against expensive legal bills. These sorts of risks will become even more apparent as the number of cannabis stocks continue to grow and the amount of active investors and traders diligently following these companies hope to capitalize on the market by challenging management and business development goals.

We continue to follow various insurance claims affecting the cannabis Industry. We are seeing claims in the product sector, D&O claims from shareholders, employment dismissal issues and crop/property claims due to the fires on the west coast. California’s gray market persisted for 20 years, but over the summer it became mandatory that any cannabis product intended for commercial sale undergo product safety testing by state certified labs. A Sacramento testing facility that had serviced the industry for years was just suspended for failing to test for 22 pesticides. The cannabis was distributed to California consumers and the recall will cost many companies in legal fees, fines and potentially their licenses while the state courts figure out who is at fault for the lost revenues. Stories like this will hopefully start to weed out the bad actors in the industry.

We highly recommend that management review their insurance policies, policy limits and deductibles every six month to make sure that as your business grows, you are maintaining adequate coverages. Many things change in the course of a year, it is important to constantly manage your risk assessments. S2S Insurance Specialists are dedicated to helping you insure, from seed to sale, all your cannabis, CBD and hemp insurance needs.

Reach out Eric Rahn and David Rahn to find the cannabis insurance policies that are most suitable for your company.

*https://www.brookings.edu/blog/fixgov/2018/12/14/the-farm-bill-hemp-and-cbd-explainer/

Weed | A Guide On Legal Marijuana Products | S2S Insurance

Cannabis advocates, for the most part, are very well versed in the socio-economics of legalizing cannabis. They can tell you historical criminal data, they can talk to you about the health benefits and impacts of the plant along with many other data points. While all that is fantastic, if you’re new to the world of recreational and medical cannabis, you may have some basic questions about what type of marijuana products are out there.

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Let’s be honest, many people are interested in cannabis for its psychoactive effects, but what if you’ve steered clear of marijuana up until this point and know nothing. What do you do? We at S2S Insurance Specialists are not only experienced insurance specialists, but we take all aspects of the cannabis industry seriously as well.  Check out these tips below on how to shop for cannabis based on the experience you believe suits you the best.

The basic marijuana product, the dried and cured buds of the cannabis plant, is now called flower. Dispensaries often display it in glass jars for customers to stick their noses in.

Flower comes in three main categories. Indica, sativa and hybrid. According to stoner tradition, indicas induce a nighttime sedentary effect, while sativas offer a peppier daytime buzz.

While virtually everything available in dispensaries today is a hybrid of some kind, indica became associated with certain observable characteristics like broader leaves, and most importantly, its earthy smell. Sativas, meanwhile, are generally associated with bright smells like citrus and pine.

Each of the three main categories are divided into thousands of “strains” just as there are many varietals of grape. The difference is there is a formal recognized difference between, say, malbec and merlot grapes. But even with the best known marijuana strains – such as sour diesel, OG kush or durban poison – it is largely up to the beholder to determine what a plant is.

Savvy buyers understand that what one shop calls sour diesel, won’t necessarily resemble what another shop calls sour diesel. The defining trait of a sour diesel – a diesel-y smell – is up to the beholder to look for or not, as she wishes. Similarly if the sour diesel isn’t selling, there is nothing to stop a dispensary from renaming it something that will sell better.

Labels are not especially helpful, but that doesn’t mean customers can’t tell the difference between good pot and bad pot. Or, given the abundance of product available in legal places, good pot and even better pot.

Marijuana and many other plants get their smell from chemicals called terpenes. And many connoisseurs look for rich terpene bouquets. Other aromas, Kornberg said, can clue buyers into lower-quality product. The smell of hay can indicate the plant was improperly cured or dried, she said, and is “kind of the worst”.

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As interest in cannabis grows, the demand and market for cannabis related businesses will grow as well. No matter what aspect of the cannabis industry you are interested in, do not neglect risk management while you’re putting together your business plan. Insurance is a necessary component of any business plan and it is no different when starting and running a cannabis related business. Contact Eric Rahn of S2S Insurance Specialists to discuss your risk management strategy.

read more at theguardian.com

American Banks Missing Out On Legal Cannabis In Canada

S2S Insurance, cannabis insurance, contact Eric Rahn today, marijuana liability insurance, cannabis bankingThere are articles and news reports across the internet that recognize the money making potential in the legal cannabis industry. In the US, in states that have legalized marijuana in some form, people have invested heavily in the industry banking on big returns. People working in the trenches of the industry are starting to see early returns on their investments and they have the cash to prove it. While it is good to be rolling in dough, it is not ideal, and leads to some serious problems.

Most banks, large and small are not willing to extend their services to cannabis related businesses because of the plants status with the US government. Cannabis is listed as a Schedule 1 controlled substance in the Controlled Substance Act. As long as this federal law lists the drug as a Schedule 1 controlled substance, the financial industry will face significant challenges all the way from banking to merchant services by risking running afoul of federal law if they work with weed related businesses. The problem is not limited to the United States, it is impacting Canada as the entire country has legalized the use and sale of the drug.

Even though Canada legalized recreational marijuana and opened the door to a flurry of business activity, big banks in the United States and Canada are keeping the industry at arm’s length because of pot’s muddy legal picture in the United States.

Cannabis, while legal for recreational use in nine US states, and Washington D.C., remains illegal under US federal law. American banks have largely stayed away from providing services to the industry because federal regulations prohibit lenders from working with any business that deals in illegal drugs. Lenders could face money laundering charges in the United States if they do.

But banks could be missing out on a bonanza. The marijuana industry is expected to grow substantially in the next five years, with sales in the United States expected to hit $23.4 billion by 2022, according to cannabis market research group Arcview. Canadian sales are expected to hit $5.5 billion.

cannabis insurance specialists, s2s insurance specialists, legal cannabis, dispensary insurance, marijuana insuranceStill, most of the largest banks remain on the sidelines for now — even in Canada, where banks have to worry about potential compliance issues abroad. The American Bankers Association, the US industry’s powerful lobby, has said it wants Congress to resolve the conflict between federal and state laws so banks aren’t stuck in the middle, though it doesn’t have a position on legalization itself. Right now, banks that do decide to take a chance and quietly work with marijuana businesses are expected to file suspicious activity reports for every transaction related to those accounts — a huge and potentially expensive logistical headache. TD Bank (TD), the Royal Bank of Canada and Bank of Montreal (BMO), all of which have an international presence, declined to comment for this story.

As long as cannabis is considered a Schedule 1 controlled substance there will be an inherent risk to working in the cannabis industry. Not only are there legal risks, but because normal financial services are not available, you’ll  be dealing in cash which posses it’s own set of problems. Your business could be targeted for theft and robbery, which may come with property damage and more. If you are considering or already involved in a cannabis related business, you need a risk management strategy. Reach out to S2S Insurance Specialists and talk with Eric Rahn about your business and risk management strategies.

read more at cnn.com