Photo credit: Vladdeep.
In many parts of the country—and arguably the entire world—cannabis is a burgeoning industry. Until 1996, when California approved medicinal cannabis, there was no licit cannabis industry in the U.S. With the implementation of the 1996 Compassionate Use Act, the medical cannabis industry emerged, stumbling head first into the world of legal business. And with legal business comes all the liabilities and potential losses associated with any industry.
So, it’s been 25 years since states around the U.S. started welcoming legal cannabis businesses. On top of that, cannabis still remains in a liminal space between state and federal-legality. Both of these features render insurance for cannabis-related companies a complicated mess. In fact there are very few people aware of the subtle nuances and complexities associated with insuring a cannabis business.
Cover Cannabis knows a lot about this complicated mess. Not only is Cover Cannabis among the very few with the expertise to navigate the cannabis-insurance space, members of their staff were some of the very first people to work in that space.
Cover Cannabis acts as a mediator between cannabis-related businesses and insurance companies. They look at businesses, help them determine their needs, then read the fine print on the policies to ensure that insurance covers the company as much as possible. As they state on their website, one can think of them as “insurance concierges.”
The Team: 100 Years of Experience
Cover Cannabis has a team that has over a hundred years of experience in an industry less than 30 years old. As Juan Cruz, director of marketing, told Emerald: “we have the years of experience, the knowledge and the expertise in both the cannabis world and in insurance… if you combine all of our team members at Cover Cannabis, there’s around 100 years of experience in the insurance world.”
Their senior commercial insurance specialist, Theresa Graves, worked on some of the very first cannabis insurance cases in California. She has been with Cover Cannabis for 15 years and has 25 years’ experience in the field–which is almost as long as the field has existed in the U.S.
This kind of experience is crucial to a field such as cannabis insurance. In this sector, an insurance specialist requires a thorough understanding of insurance subtleties, as well as relationships with different carriers. They also need knowledge of the cannabis space specifically. If not, a specialist cannot properly advise a client. As a result, they could inadvertently get them a policy that doesn’t properly cover the liabilities associated with their business.
The team at Cover Cannabis has both the knowledge and expertise necessary to ensure that a cannabis business is covered in an event such as a work-place injury, product recall, lost product, or any other event where entrepreneurs may need to file an insurance claim.
How Cannabis Insurance Functions
Cannabis insurance is a specialized form of insurance that functions the same as any other insurance. It protects a business from certain losses and liabilities. What makes cannabis a little different is that it’s federally illegal.
This means that insurance cannot cover certain things like transporting cannabis across state lines, especially when cannabis is illegal in the next state. Furthermore, cannabis insurance does not cover federal raids or property seizures. But, there are many things that it does cover. This includes cargo, equipment, general liability, crops, workers compensation, property, and more.
The federal government’s stance on cannabis generally means many insurance companies won’t work with cannabis-related businesses.
Insurance agencies can sell a business a policy; that business could think they’re fully insured. But if the policy’s fine print has certain exclusions for schedule 1 drugs, the policy would be useless. An unscrupulous insurance agent could advise a business owner to get a certain policy; but the policy could actually be void when that entrepreneur makes a claim.
“It’s a very complicated space,” Cruz told Emerald. “You need to know what you’re doing, otherwise you’re going to get your clients in trouble, and then eventually you’re going to get yourself in trouble.”
Cover Cannabis informs their clients what insurance can and cannot cover, and explains how the policies they’re signing protect them. This requires extensive knowledge of the laws around cannabis and insurance that most people just aren’t equipped with.
Because Cover Cannabis has been in the space for so long, they have relationships with insurance carriers that work with cannabis-related businesses in every state where it’s legal.
All Cover Cannabis investments are protected and confidential. They only share businesses’ information with the carrier and themselves. All tax information and names are concealed and only shared with the necessary parties.
Clearing the (Smoky) Air: the Truth About Cannabis Insurance
There are many misconceptions about cannabis insurance. One major misunderstanding is the price. Many believe that insurance for cannabis-related companies is ultra-expensive, and while it is more expensive than ordinary insurance (due to the liabilities involved) — it is still affordable.
The team at Cover Cannabis identifies the best carrier and policy for a business, ensuring that they’re not paying for more than they need and that they’re getting the best possible price among the available carriers.
This is another prominent misconception about ensuring a cannabis-related business: that there are very few carriers available. This is partially true, there aren’t as many options for a cannabis-related business as there are for other forms of insurance.
However, as Cruz told Emerald, “That has changed as more states have become legalized, whether it’s medicinal or adult use. There are more carriers now, so there’s more available options. And those carriers are adding additional policies that they would offer. Now we’re getting to a point where, in some states, there’s even crop insurance.”
Consequently, Cruz said, there are plenty of options.
General liability isn’t the only thing that insurance providers offer. For example, there are many policies that are specific to cannabis, like crop insurance (which covers the cannabis-crop for growers) or product liability insurance (which covers cannabis products in the case of various kinds of potential incidents).
The proliferation of insurance companies also contributes to the gradual reduction in price over the years. As more carriers become available, the price of cannabis-insurance has dropped due to more competition.
So, these two misconceptions are interrelated, have changed over time, and actually directly affect each other. The cannabis industry is a changing industry, so these misconceptions no longer stand.
Cannabis Insurance: as Necessary as Any Other Industry
Insurance is insurance, every business, in every industry, needs it. And to put it simply: in the cannabis-insurance world, experience matters, and Cover Cannabis has a lot of it.
Written by Teddy Duncan