SAFE Banking Act of 2019 Would Protect Banks Working with Cannabis Companies

The amount of liability in the marijuana industry is staggering. Possibly the greatest financial risk of owning a cannabis dispensary, or any business that handles the marijuana plant on a regular basis, is that most cannabis based companies are left with no choice but to work on a cash-only basis leaving them vulnerable to robbery. The House Financial Services subcommittee met recently to discuss the challenges banks are facing by working with cannabis companies and potential solutions. The meeting included discussing the newly introduced SAFE Banking Act of 2019, also known as the Secure And Fair Enforcement Banking Act of 2019.

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While some robberies at cannabis companies involve violence, including one incident in Colorado that left a security guard dead, the greatest threat of robbery may be internal from trusted employees. The temptation when cash money is laying around is often too much to overcome. Dispensary insurance is of the utmost importance with the current banking challenges that cannabis companies must contend with. Cannabis insurance specialists are difficult to come by since most insurance companies steer clear of any business that is associated with a Schedule I controlled substances.

While the House of Representatives may vote on and pass the SAFE Banking Act of 2019 during the current legislative session, the bill will face a much greater challenge passing in the Senate. Senate Majority Leader Mitch McConnell does not support the legalization of marijuana, or anything that furthers marijuana reform, even though he does support the legalization of hemp. Regardless of what happens, S2S Insurance Specialists are here for any cannabis company’s insurance needs as we have attained a clear understanding of the financial risks associated with the cannabis space.

“The conditions are as good as they’ve ever been for legislation to proceed,” said Ryan Donovan, chief advocacy officer for the Credit Union National Association, a trade group that lobbies for credit unions. “75% may be a little high, but [the odds] are better than they were in the last Congress.”

“This hearing is part of an effort to try to generate some momentum in the House of Representatives,” Donovan said. Prospects for cannabis-banking legislation “might be easier to see once we get past the shutdown threat and get into more of a normal legislative environment,” he added.

“The safety of thousands of employees, business owners, security personnel, police officers and community members is in your hands,” Neill Franklin, the Law Enforcement Action Partnership’s executive director, told the subcommittee on consumer protection and financial institutions. LEAP is a nonprofit known for opposing the “war on drugs.”

The ranking member of the House Financial Services subcommittee, Missouri Rep. Blaine Luetkemeyer, argued against the SAFE Banking Act of 2019 and his thoughts were echoed by the chairman of Smart Approaches to Marijuana, Jonathan Talcott.

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Missouri Rep. Blaine Luetkemeyer

“You really need to address the Controlled Substances Act and its prohibition on marijuana … before any of the proposed changes and safe harbors would be effective,” Talcott said in his testimony. Luetkemeyer made a similar point, saying lawmakers were “dealing with an illegal industry at the federal level” and “putting the cart before the horse” by focusing on the industry’s banking needs.

Until marijuana is rescheduled on the Controlled Substance Act, or completely descheduled, cannabis companies must make sure that their financial risks are covered and marijuana insurance policies are the smartest alternative. We offer CBD product liability insurance, cannabis crop insurance, D&O insurance and cannabis dispensary insurance. Contact Eric Rahn or David Rahn, your cannabis insurance specialists.


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.