Like it or not, marijuana is a growing business in the U.S. And like any business, cannabis cultivators, dispensaries and retailers worry about getting the proper commercial insurance to protect their operations against issues such as theft, personal injury and property damage.
The trouble is that such companies operate in a legally gray area. While medical marijuana has been legalized in at least 22 states and the District of Columbia, and the sale of recreational cannabis to adults is legal in Washington State and Colorado, marijuana remains illegal under federal law.
So far, much of the insurance industry has taken a hands-off approach to Marijuana Inc., with only a handful of insurance organizations reaching out to the legal cannabis industry, to offer coverage.
But that may be changing in the near future.
"We're... learning how to basically roll over right now -- we're not even to the crawling stage yet," said Patrick McManamon, managing director of Cleveland-based Cannasure Insurance Services and a third-generation insurance professional.
A 2013 report from ArcView Market Research estimated the value of the legal marijuana market in the U.S. last year at $1.5 billion, with the sector projected to increase by 68 percent to $2.6 billion this year.
The legal marijuana industry faces many unique challenges. Being illegal under federal law, most banks and financial institutions won't do business with cannabis firms. That forces many marijuana transactions to be conducted in cash, which can leave dispensaries vulnerable to theft and robbery.
"That's always been a thorn in the industry, because there's all this cash involved.," said J.B. Woods, president of Greenpoint Insurance in Parker, Colorado.
But Woods says his larger clients are taking the initiative when it comes to security. "They create their own armored courier service, they're doing everything more so in-house," he noted, "because they can't depend or rely upon any other companies."
There can also be some unique property loss issues. McManamon gives the example of a marijuana company employee transporting cannabis from a cultivation facility to a dispensary.
"These guys are transporting at least $10,000, $25,000, $30,000, $50,000 -- in some cases six figures -- on a daily basis or weekly basis, and there's no coverage for it," he said.
"If the guy gets in an accident and something happens to the product at that time, it's gone and that business owner is out of luck," McManamon continued. "That's not the case if you were driving a milk truck and you got in a car accident and the milk [was destroyed]. You're going to get paid for that property."
Another big issue is product liability. Marijuana edibles appear to have played a role in two deaths in Colorado earlier this year. And while the link between cannabis ingestion and those fatalities is still under investigation, Woods and McManamon agree that getting the proper definitions in place for cannabis product liability is a priority for their industry.
For all of marijuana's outlaw history, the legal industry is a business much like any other, McManamon said. "It's literally 75 to 80 employees, 10 hours a day... millions of dollars [spent] building all of these facilities. And then you walk into the dispensaries and realize they're no different than pretty much any retail business that you've ever walked into -- just the product that they happen to sell is different."