Cannabis General Liability Insurance is required by virtually every business operating in the medical, recreational or adult-use marijuana business to not only protect assets, but also as an investment. Marijuana Doctors, Cannabis Cultivators, Marijuana Dispensaries, Cannabis Lawyers, Cannabis Accountants and all Ancillary Marijuana Support Businesses should carry cannabis liability insurance. Depending on the type of marijuana business that is operating will depend on what additional cannabis insurance will be required to operate legally.

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.

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The SEC May Find Your Marijuana Company Negligent in Cyber Fraud Cases

The enthusiasm towards the marijuana industry is palpable. The cannabis space is growing at a remarkable pace and both voters and legislators are going through the slow process of adapting laws to make room for the industry in the mainstream. However, it is easy for a marijuana company to get lost in the enthusiasm and lose sight of the bigger picture. The reintroduction of cannabis into the mainstream at this time, an era where technology is advancing at a speed most people are challenged to keep up with, presents risks any cannabis entrepreneur should stay current with on a consistent basis. These are the sorts of risks that only the proper marijuana insurance policies may be able to cover. Many companies may feel they have solved their cyber security problems by having anti-virus software throughout their network of company computers. But, many cyber attacks have little to do with the vulnerabilities present in a computer, but instead with the users of the computers.

SEC cyber security report, Marijuana company, marijuana data breach insurance, s2s insurance, eric rahn, marijuana insuranceRecently, the SEC issued a warning to mainstream publicly traded companies that they will soon have little tolerance for negligence in maintaining cyber security. While the advancement of technology is swift, companies have now had decades to become accustomed to electronic financial transactions and the criminal efforts to fool companies into making deposits into fraudulent accounts. Sections 13(b)(2)(B)(i) and (iii) of the Securities Exchange Act of 1934 (“Exchange Act”) requires that companies “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization,” and that “(iii) access to assets is permitted only in accordance with management’s general or specific authorization.”

marijuana company, cannabis email fraud, marijuana cyber security insurance, eric rahn, s2s insurance, who insures marijuana companies, cannabis insurance specialistsIn the SEC report, none of the companies referenced, which lost nearly $100 million in total to cyber fraud, were found to be guilty of negligence. However, the report is a clear warning by the SEC to these companies and others, that anything but the strictest protocol for tracking transactions will be sufficient for publicly traded companies moving forward in order to protect investors. Hardly any of the funds stolen from these companies were recovered. To have a reparation filed against a company by the SEC for negligence in accounting controls on top of losing millions of dollars would scare shareholders away. The incidents referenced in the report involved the simple use of email. In some cases, an email address was created that looked like an official request for payment from an executive at a vendor. On the surface the email may have looked official, but employees working in processing plainly rushed through their tasks without reading emails thoroughly, or they would have likely identified discrepancies. The other cases involved hacking into company email accounts and manipulating financial ledgers. The criminals blended future transactions into the their look-alike vendor accounts with legitimate future transactions. The SEC’s point should be well taken. The stolen funds were ultimately due to the fact that the companies were not following their own sets of checks and balances and failed to identify the scams, when a diligent eye would have caught them.

marijuana company, s2s insurance, david rahn, cyber security insurance, cannabis insurance specialistsNow, if we take a look at the cannabis industry, the vulnerabilities to these sorts of attacks seem obvious. Cannabis companies have much more to track on their own due to the federal Schedule 1 status of marijuana. A marijuana business does not have the benefit of bank record keeping to track transactions since most banks refuse to accept the funds of a cannabis company in fear of violating anti-money laundering laws. Granted, cyber attacks like the ones identified in the SEC report rely upon electronic transactions, therefore a cash business would not be the target of this specific sort of cyber crime. However, as long as a criminal can isolate a flaw in a company’s tracking of financial transactions, they will see an opportunity to steal. Should the federal government look to legalize cannabis, and banks do start accepting the funds of the marijuana industry, then cannabis companies may be the biggest target of all. Phases of transition are where mistakes are most likely to occur, and hackers know it.

Tracking products all the way from seed to sale is not only happening in the cannabis industry. With the creation of blockchains that are commonly associated with cryptocurrency, comes a means to create verifiable ledgers for all sorts of transactions that are not centralized and therefore are not as easy to hack. So, if you want to know that you are eating a tomato grown on a certain farm in the United States, the tracking system can confirm where the tomato was grown and where the seed came from. To do this, a strict log of all transactions must be kept and quickly verified by third parties. Any discrepancy in that log throws up red flags and any fraudulent transactions can be rooted out quickly. It is this sort of organized tracking that is the way of the future and intended to eliminate these very sorts of fraudulent cyber attacks. While the advancement of technology provides new and different opportunities to steal, it also provides solutions.

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The unfortunate incidents cited by the SEC in their report shows that human involvement is still very necessary when it comes to accounting and logging transactions. It is necessary for all protocol to be be followed exactly on a consistent basis in order to prevent these sorts of breaches that can result in the loss of millions of dollars. Computers are nothing without people still, which means that human error will continue to be a factor. However, cyber security or data breach insurance for a marijuana company can counter those financial losses. It is up to the pioneers of the cannabis industry to set the standard, once marijuana goes completely mainstream, by recognizing cyber threats and continuously staying updated on new threats. Things are happening fast, and should marijuana become rescheduled or even descheduled, then a multi-billion dollar industry will suddenly be thrust upon the banking sector. Clever criminals will identify this transition phase as a time when sloppy accounting and other slip ups are likely to happen leaving cannabis companies vulnerable to cyber attacks.

Eric and David Rahn of S2S Insurance Specialists understand these cyber risks well. With over two decades of working experience in mainstream business and watching technology advance at such a rapid pace, they can help you understand the cyber security risks of your marijuana company. They can review with you the cannabis company data breach policies that would most benefit your company. Contact Eric and David Rahn, the cannabis insurance specialists, for more information.

Product Liability Claims In Cannabis Bound To Rise As Investments Increase

The acceptance of cannabis use is on the rise across the country. Each year a few more states choose to legalize the Schedule 1 illegal substance, and support for legalization on the federal level is also on the rise. Not only are state and federal legislators taking a deeper look at cannabis but also investors. Besides venture capitalists and angel investors for startups, large corporations are beginning to stake a claim in the cannabis market. Constellation Brands is investing a record (for cannabis companies) $4 billion US into Ontario-based Canopy Growth Corp in a deal to produce non-alcoholic cannabis based beverages. This massive investment by Constellation Brands set off a wave of investments into marijuana related stocks. While this explosion of investment is good for the cannabis industry, the inevitable result will be a rise in product liability litigation.

dispensary insurance, marijuana edibles, s2s insurance, eric rahn, liability insurance for cannabisYou may be thinking, how can more investment in the cannabis industry be a bad thing that leads to product liability litigation? The equation is simple, more consumers using more products plus the law of averages. With increased medical and recreational marijuana use and sales there will in turn be an increase in potential litigation. Issues like negligence, breach-of-contract, intentional misrepresentation, marketing to youth, design defect claims all increase in their probability of occurrence every time the market, use and demand increase. As the market grows there will be fewer customers with a full knowledge of what they are consuming, which could lead to over dosing and other bad reactions. Customers may potentially sue for negligence or failure to warn in that instance.

Constellation, among the first big alcohol makers to invest in the marijuana industry, pumped almost US$200mln in Ontario-based Canopy Growth Corp (NYSE:CGC), last year in a deal to produce a non-alcoholic cannabis-based beverage. It recently upped its investment in cannabis with a record US$4bn investment in Canopy, spurring a buying frenzy in marijuana stocks.

“Fundamentally, we believe cannabis is going to be a big business worldwide … not going to be limited to Canada. This will be undoubtedly a market that develops in the United States, it’s already done so on a state-by-state basis here,” Newlands told the Barclays Global Consumer Staples Conference in Boston. “It’s developing around the world, in places like Germany and Australia and other markets. So the whole combination of things is shaping up in a way that this is going to be a big business.”

s2s insurance, eric rahn, insurance for marijuana, cannabis insurance specialists, marijuana businessIf there is increased investment in the cannabis industry, that should translate to growth and that’s good. With said growth comes an increase in potential for product liability claims, and that’s bad. Cannabis related companies can protect themselves with a cannabis product liability policy. A standard commercial general liability insurance policy isn’t adequate protection for the cannabis business owner. General liability polices contain Schedule 1 substance exclusions which would make the policies useless for cannabis/marijuana businesses whose businesses are centered around a federally illegal substance. Cannabis business owners should be working with experienced cannabis specific insurance companies and agents. At S2S Insurance Eric Rahn provides his clients with the experience and expertise to ensure they have a risk management portfolio that makes sense. “As your business grows, has your insurance coverage grown with it?” -Eric Rahn. Don’t find out the hard way that you don’t have the right coverage or the right amount of coverage.

read more at proactiveinvestors.com

Cannabis Businesses Have To Trust Their Insurance Partners

A federal court in Colorado recently decided a cannabis case that may impact the marijuana insurance industry and cannabis businesses. The case involves a cannabis company suing its insurance company for failing to pay on claims. The insurance company denied the claims that fell under their general liability policy covering the company’s crop and an additional claim for robbery and damages as a result of the robbery. The insurance company actually took a counter-intuitive approach and argued that it’s own policy was an illegal contract based off the federal Controlled Substance Act. The court, correctly, dismissed that argument and sent the parties to arbitration over the remaining claims. s2s insurance, eric rahn, cannabis insurance, marijuana, cannabis businesses, cannabis only insurance

From an S2S Insurance perspective, this case is absolutely infuriating. Cannabis businesses and cannabis business owners have accepted a very challenging endeavor and often have invested their own hard earned time and money. The cannabis industry is complex, involving varied business types, sometimes under one company. Business owners have to deal with owning or leasing buildings, equipment, crops, flowers, oils, edibles, cash management, transportation and more. Cannabis businesses need reliable business partners, not adversaries willing to sabotage their own interest to negatively impact their clients during a time of need.

ArcView Group, which tracks the legal marijuana markets, recently estimated that legal U.S. pot sales could reach $6.7 billion in 2016. As the legal marijuana economy has grown, insurance coverage for this emerging industry has become a hot topic. The U.S. District Court for the District of Colorado in The Green Earth Wellness Center, LLC v. Atain Specialty Insurance Company, No. 13-cv-03452-MSK-NYW, 2016 WL 632357 (D. Colorado Feb. 17, 2016) was recently faced with determining the extent of coverage under a commercial property policy for damage sustained to marijuana plants at a growing facility and addressing whether legal marijuana was even insurable.

Finally, the Court declined to follow Tracy v. USAA Casualty Ins. Co., 2012 WL 928186 (D. Hawaii March 16, 2012) and declare the policy unenforceable as against public policy citing, in particular, the “several additional years evidencing a continued erosion of any clear and consistent federal public policy in this area.”

The Green Earth decision emphasizes the need for insurers writing risks in the developing legal marijuana industry to be as explicit as possible in their policies as to what is and what is not covered.

S2S Insurance, Eric Rahn, cannabis businesses, marijuana liability insurance, cannabis liability insuranceCannabis businesses require an insurance company that knows the marijuana industry and has intimate knowledge of insurance and how the two work together. Some insurance companies try to fit their round insurance mold into the square peg of the cannabis industry, and in doing so cannot protect their clients the way their clients need to be protected. At S2S Insurance we are commercial cannabis insurance experts who work with dispensaries, growers, cultivators, realtors, equipment manufactures, laboratories, and a number of other businesses within the cannabis industry.

When speaking to Eric Rahn of S2S Insurance about this issue he stated, “Your insurance specialist should be a key adviser to your business, just as your accountant and your attorney.” Cannabis businesses and cannabis business owners must take the time to work with an experienced team like S2S Insurance and do a comprehensive risk analysis to protect said business. Your insurance partner should be helping to protect you as you grow, not sue you when you hit a bump in the road. 

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Cannabis Insurance Provides Peace of Mind

S2S Insurance, Eric Rahn, dispensary insurance, marijuana doctor insurance, medical marijuanaAll cannabis related business owners have unique issues and concerns that do not apply to traditional business owners. As a cannabis related business owner the biggest concern is the legality of the product you sell. Marijuana is legal in many states but is a Schedule I drug according to the DEA and is illegal federally. A marijuana business owner has no control over what happens to the legality of cannabis, but they can minimize their risk exposure. Cannabis insurance, specifically property and casualty insurance, protects against property losses and losses that may result from a lawsuit due to negligence.

Property and Casualty insurance can be broken into two types of coverage in one. The property piece of the policy will protect the assets of your business if they are damaged by a random event such as a storm, theft, or vandalism. The casualty piece of the policy will cover the business if you’re sued for negligence whether it’s you the business owner or one of your employees. If someone slips and falls in your dispensary and requires medical attention, that person might file a lawsuit against your business for damages. Losing a negligence case in court could mean you are liable for for tens or hundreds of thousands of dollars. With this form of cannabis insurance you’ll be covered not only for the damages but also the attorney fees.

S2S Insurance, Eric Rahn, cannabis insurance specialists, marijuana insurance, weed, who insures the cannabis industryA Marijuana grow operation in Southeast Portland caught fire twice overnight. The first time was Tuesday evening, the second time was early Wednesday morning. The second fire destroyed the business’s storage and office warehouse building. Photo courtesy Portland Police Bureau

“Obviously re-kindle is always a question we want to know for ourselves if there is anything we could’ve done or should’ve done differently, but then we have to do our due diligence for the occupants in the business owners and make sure there wasn’t anything nefarious going on,” said Cpt. Louisa Jones of Portland Fire and Rescue.

The grow operation which is housed in a warehouse next door was not damaged, just the office and storage area.

In the case of property damage there are other concerns that business owners have to manage. Depending on the amount of damage from a storm, fire, or vandalism, your business may have to cease operations until the damage can be assessed and repaired. If operations are suspended, this will undoubtedly negatively impact your cash flow. Fortunately, cannabis insurance covers operations interruptions. Put another way, if you have to stop running your business for a duration of time due to circumstances out of your control, then you are eligible for compensation covered by your policy. S2S Insurance can help you assess your level risk and plan accordingly. “What”s your tolerance for risk? How much can you afford to lose? Are you properly covered?” – Eric Rahn, CEO S2S Insurance. Knowing your level of risk exposure and planning for those risks can provide peace of mind in an industry that keeps business owners concerned about what is coming next. Contact S2S Insurance today to determine the level of cannabis insurance your business needs.

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Cannabis Business Property Insurance Protecting The Bottom Line

Making the decision to invest in a marijuana related business takes a big investment of time, energy and money. Early in the process of making those investments, cannabis business owners need to ask themselves how do they plan on protecting those investments. One measure of protection begins with business property insurance. Whether you own a marijuana dispensary, a cannabis testing lab, or grow operation, business property insurance can protect the items and space you need to keep your business running.

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Marijuana related businesses face unique challenges and risks because of the products being sold and their relationship with the retail market. Marijuana related business owners are at serious risk of vandalism. Someone could try to break into a dispensary or a lab and could damage or destroy computers, monitors, display cases, storage areas, merchandise and more. There is also the risk of theft of those same items. A cannabis lab which may have expensive high end equipment would especially want coverage for stolen computers or tablets. A dispensary is going to want coverage for stolen marijuana, edibles, or other marijuana related items that might be found in a dispensary. Aside from vandals and thieves there are also natural disasters. Every year across the country there are news reports of terrible storms and devastating fires that cost property owners billions of dollars. We can’t predict when and where a storm or fire is going to strike, but as a cannabis business owners, there is no reason to not be prepared.

The Carr wildfire in California has likely caused an estimated $1.5 billion in insured losses to date, foreshadowing another major wildfire loss event for insurers in the state, according to a report by Moody’s Investors Service Inc.

The wildfire has ravaged parts of Shasta County in or near Redding in Northern California, caused six deaths, and left substantial property damage to date, according to the property/casualty sector report published by the New York-based ratings firm on Thursday. The fire has destroyed 1,555 homes and commercial structures, damaged an additional 240 homes and structures, and burned about 121,000 acres so far, according to the California Department of Forestry and Fire Protection.

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At S2S Insurance we work with each client individually to identify their risk management needs and set up a plan that makes sense for each individual cannabis business owner. For cannabis business owners we look at location of the business, demographics, crime data statistics, annual weather patterns and additional data which help to formulate a sensible plan for your business. As a cannabis business owner, you don’t want to be caught unprepared when a big storm hits, or when a wildfire breaks out. You as a business owner have no control over if someone wants to break in your windows and vandalize your place of business. We can’t control the unknown but we can prepare for all of those things providing peace of mind and a tangible way to recover when disaster strikes. All policies are subject to policy limits and should be reviewed with an experienced agent and your attorney.

read more at businessinsurance.com