Paul Warshaw, CEO of GreenRush, a California technology company that does business with over fifty medical marijuana dispensaries, says adequate insurance policies for cannabis-based businesses have been “few and far between.”
The landscape is shifting, however, as carriers are taking a fresh look at what is becoming a robust and profitable industry. Insurance underwriters are developing liability coverage that can address the needs of the industry as it expands. Gerry Finley of Munich Reinsurance America states that the policies are likely to come at a premium price.
Adam Weiss and Spencer Uniss, owners of Bolder Cannabis and Extracts in Colorado, say the high prices are due to minimal competition among insurance companies for cannabis-related business coverage. The partners carry a full range of coverage for their multi-tiered business, from workers compensation and health insurance to product liability.
Spencer Uniss and Adam Weiss, founders of Bolder Cannabis and Extracts Look Forward To More Insurance Options Coming To The Market (Forbes)
There is currently scant data for liability exposure in the industry. Theft is listed as a primary risk, as businesses have often operated as cash-only enterprises. Pollution complaints are another, particularly for growers who have their facilities in a densely populated area. Reliable numbers are hard to come by at this point, and pricing has yet to be standardized. Uniss believes that pricing will come down “[a]s insurers see companies like ours operating in a responsible, compliant way” and can gather more accurate information regarding risk exposure.
Regional legalization has not convinced all major insurance carriers to participate in coverage, however. Lloyds of London has discontinued policies for cannabis-related businesses until federal law declares marijuana legal.
Warshaw said that decision affected his technology company, which provides medical marijuana dispensaries with scheduling software. Neither he nor the other employees of GreenRush have any actual contact with the cannabis plant. Nevertheless, the company will not be able to renew its business policy with Lloyds.
The health insurance sector seems to operate independently of its business insurance cousin. Bill Moore of Munich American Reassurance Company states that with medical marijuana, carriers pay greater attention to the risks inherent to the underlying illness than to its treatment.
A survey taken at the Association of Home Office Underwriters (AHOU) Annual Conference in Washington, D.C., took the pulse of the underwriting community regarding health insurance and the marijuana industry. Usage frequency was a priority for 43 percent of those polled. Medical history followed at 37 percent, age came in at 14 percent, with current health last, at 6 percent. Those carriers who did not already have policies that addressed marijuana use planned to offer them in the near future.
Weiss and Uniss said that health insurance was one area where they paid about as much as a non-cannabis-based company might pay.
Insurance carriers may be opening up options for companies, but where individual applications are concerned, cannabis consumption has not yet joined the ranks of other products such as tobacco and alcohol. Applicants for health insurance are often still asked if they have tested positive for cannabis use.