As political and cultural momentum builds for legalizing marijuana for medical and recreational use, it's created a so-called “green rush” of people trying to cash in on the surge in cannabis-related businesses.
That surge is also creating new opportunities 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 illegal
under federal law. But last August the
Justice Department announced it would not challenge state marijuana
laws, and just last month Attorney General Eric Holder said legal
marijuana business should have access to the banking system, if
only out of consideration for public safety.
Greenpoint Insurance Advisors, a Colorado-based company
that provides business insurance not only to medical marijuana
stores, dispensaries and growers, but also to ancillary companies, says in a statement on its website that "The standard insurance carriers such
as State Farm, Farmers, Travelers, etc… don’t typically provide
coverage for this unique industry."
These insurers are also trying to advise those looking to profit indirectly from the cannabis boom, such as owners of buildings and structures who rent to marijuana businesses.
“All too often landlords will lease space to a cultivator, dispensary or infused product manufacturer and then at renewal time their policy is cancelled,” warns Cannasure, another insurer that serves the marijuana industry. “We have the ability to insure your property and avoid the cancellation process.”
And despite the challenges, some insurers say their cannabis-related ventures is picking up. Mike Aberle, with GP Insurance Brokers in Rancho Cordova, Calif., said his company has been receiving up to 25 applications daily for marijuana-related policies.“We offer coverages outside the norm,” he said. “We offer crop coverage. We cover your living plants.”
GP Insurance Brokers also sells everything from general liability to theft insurance to marijuana businesses across the country, with the 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 their applications so we can start the process.”
That coverage, however, is only for businesses, and does not extend to people who grow marijuana at home.
There's even coverage in the event local law enforcement raids a marijuana business.
“If a state agency or lesser came in and that person was found innocent in the end, we pay,” he said, “because it wasn’t an illegal action.”
But all bets are off, Alberle notes, if the feds decide to raid a cannabis establishment.
“When you talk about federal, you can’t cover federal because it’s illegal,” he said. “We’d all go to jail for insuring an illegal operation.”