Thousands of cannabis and hemp growers are uninsured or underinsured, and in the line of fire. Many farms are still struggling to pick up the pieces from last year’s devastating wave of blazes that destroyed hundreds of farms, caused millions of dollars in damage and endangered countless cannabis crops. The hard reality for many cultivators is they invested all their money into licensing and compliance but did not make the necessary investment in crop insurance, which means that in the wake of disaster, businesses are facing financial ruin.
Eric Rahn, Managing Director of S2S Insurance Specialists, one of only a handful of brokers that caters exclusively to the cannabis industry, implores cultivators to act now and secure crop insurance. Below he explains what you need to know to protect your investment from the growing threat of fire and other natural disasters:
What is Crop Insurance and What Does it Cover?
Crop insurance is specifically designed to protect cannabis and hemp growers from natural disasters such as wildfires, hurricanes/heavy winds, and flooding/water damage. However, it can also cover incidents like theft, explosions, vandalism, and other unpredictable and uncontrollable events that result in an “interruption of service.”
Specifically, crop insurance reimburses your business for financial losses and/or damages to seeds, seedlings/clones, vegetative plants, flowering plants, harvested plants and finished stock. Coverage may also include equipment breakdowns and broken machinery, but not typically pesticides or mold issues.
Unfortunately, many cultivators find out the hard way that when a natural disaster strikes, they are not protected by their general liability coverage alone. Furthermore, marijuana is still classified as a Schedule 1 drug and illegal at the federal level, therefore, they do not qualify for disaster relief programs and federal aid. The only way growers can protect themselves is by adding crop insurance as a supplemental coverage.
Who Needs Crop Insurance?
Any cannabis or hemp business involved in grow operations requires cannabis crop insurance. Certain other types of business should also consider purchasing crop coverage, including manufacturers, transporters, retail stores/dispensaries and property managers, particularly if they grow, cultivate or manufacture cannabis products at their place of business.
Where Can You Find Crop Insurance?
Currently, crop insurance is more widely available for indoor grow operations and in approved greenhouse facilities. Outdoor crop coverage is still very limited but not impossible to find. Hemp, which has 0.3% or less THC, whereas marijuana has more than 0.3% THC, was legalized by the 2018 farm bill, qualifying it for federal crop insurance. However, the federal program is expensive and approximately only 5% of the hemp crops in the country are insured under the federal program.
Many of the nation’s largest insurance carriers will deny cannabis companies coverage because marijuana is illegal under federal law. However, insurance brokers like S2S Insurance Specialists who specialize in the cannabis industry have access to a variety of insurance programs and offer multiple policy and product lines not available from one company.
Summary
The bottom line is as fires continue to pose imminent danger, cannabis and hemp growers need crop insurance to protect themselves from crippling losses. Taking steps now to minimize your risk will protect you down the road if (or when) a natural disaster strikes.
S2S Insurance Specialists provides crop insurance to marijuana and hemp cultivators with coverage options designed to meet your needs and budget. To get started, schedule a free 15-minute consultation by clicking here or contact Eric Rahn at eric@s2sinsurance.com.