As political and cultural momentum builds forlegalizing marijuana for medical and recreational use, it’screated a so-called “green rush” of people trying to cash in onthe surge in cannabis-related businesses.
That surge is also creating newopportunities and challenges for a segment of insurance companies — firms that are now offering policies to marijuana growers,manufacturers and dispensaries in the states where cannabis is legal.
Of course, marijuana remains illegalunder federal law. But last August theJustice Department announced it would not challenge state marijuanalaws, and just last month Attorney General Eric Holder said legalmarijuana business should have access to the banking system, ifonly out of consideration for public safety.
Nonetheless, it’s hard for a cannabisbusiness to get coverage from one of the big insurance companies.
Greenpoint Insurance Advisors, a Colorado-based companythat provides business insurance not only to medical marijuanastores, dispensaries and growers, but also to ancillary companies, says in a statement on its website that “The standard insurance carriers suchas State Farm, Farmers, Travelers, etc… don’t typically providecoverage for this unique industry.”
These insurers are also trying toadvise those looking to profit indirectly from the cannabis boom, such as owners of buildings and structures who rent to marijuanabusinesses.
“All too often landlords will leasespace to a cultivator, dispensary or infused product manufacturer andthen at renewal time their policy is cancelled,” warns Cannasure,another insurer that serves the marijuana industry. “We havethe ability to insure your property and avoid the cancellationprocess.”
And despite the challenges, someinsurers say their cannabis-related ventures is picking up. Mike Aberle, with GP Insurance Brokersin Rancho Cordova, Calif., said his company has been receiving up to25 applications daily for marijuana-related policies.
“We offer coverages outside the norm,” he said. “We offercrop coverage. We cover your living plants.”
GP Insurance Brokers also sells everything from general liability totheft insurance to marijuana businesses across the country, withthe average premium for a cannabis business owner coming in at around$700 annually.
“We also have several states that are getting ready to pass [marijuana laws],” he noted, “so we’re already accepting theirapplications so we can start the process.”
That coverage, however, is only for businesses, and does notextend to people who grow marijuana at home.
There’s even coverage in the event local law enforcement raids amarijuana business.
“If a state agency or lesser came in and that person was foundinnocent in the end, we pay,” he said, “because it wasn’t anillegal action.”
But all bets are off, Alberle notes, if the feds decide to raid acannabis establishment.
“When you talk about federal, you can’t cover federal becauseit’s illegal,” he said. “We’d all go to jail for insuring anillegal operation.”