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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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Understanding Insurance for Cannabis Businesses with S2S Insurance Specialists

Source: The National Marijuana News

Eric Rahn of S2S Explains How Cannabis Companies Can Mitigate Their Risk Despite Schedule 1 Status

TNMNews had the opportunity to meet with and interview Eric Rahn of S2S Insurance Specialists at the Phoenix Park Hotel for the NCIA Lobby Days event in Washington D.C.. Mr. Rahn is a member of the NCIA and joined the cannabis industry three years ago identifying a great need for risk mitigation within the sector. We were fortunate that we were able to interview Mr. Rahn first during the event as his obvious experience and knowledge set an excellent tone for the event and let us know what to expect from the professionals we would be speaking with.

What is only growing faster than the Cannabis Industry? If you said risk, you are spot on. Eric Rahn started his career in the casino gaming industry becoming very familiar with working within a regulated industries. Seeing the rapid growth of the cannabis sector he decided that their was a void of qualified international insurance brokers in this emerging sector. After identifying that many cannabis companies, both Public and Private associated within the cannabis industry were facing unmitigated in securing the proper insurance risk due to the Schedule 1 status of cannabis. He not only felt he had the knowledge and experience to help, but also that the movement needed all the help it could get to push the legalization movement forward. He then made the transition into the cannabis industry by establishing S2S Insurance Specialists and joining the NCIA.

As you listen to the interview, you will hear that he has adopted the seed-to-sale concept of tracking cannabis businesses from the planting of the seed to the ultimate sale of the product. By examining the industry in this manner he was able to identify the unique risks associated with each business. Hence the name of his company, S2S Insurance Specialists. He has identified the four major areas of risk the cannabis industry faces as banking, the IRS tax code 280E, interstate transportation and of course a lack of liability insurance. His number one suggestion is that a cannabis company makes sure it is speaking with a certified insurance broker that is familiar with the cannabis industry and its unique risks, as many brokers are not yet educated on this particular subject matter.

Mr. Rahn suggest any company raising money, bringing in outside investors or trading on a stock exchange acquire Directors and Officers Liability. Also any company selling cannabis products should consider Product Liability Insurance. There may be a lot of confusion surrounding how cannabis business owners can mitigate their risks due to the Schedule 1 status of cannabis, however solutions are out there. Cannabis entrepreneurs simply need to make well informed decisions.

We want to thank Eric Rahn for taking the time with us to address questions and provide this much needed information concerning the liability of owning a business in the cannabis sector. If you would care to reach out to Mr. Rahn and S2S Insurance Specialists, please go to S2SInsure.com or you can reach them at their various offices listed below.

Boca Raton (954) 790-6604
Coconut Grove (305)-442-1500
Denver (720)-726-6147