The Cannabis business has been at the top of the news for what seems a long time now. With Canada now legalizing Cannabis and more states in the U.S. soon to follow, California is making moves towards providing insurance options for Cannabis business owners.
On June 4, Commissioner Dave Jones announced the approval of the first Cannabis Business Owners Policy in California. Crafted by the American Association of Insurance Services, the program is a package consisting of property and liability coverage for dispensaries, processors, manufacturers, distributors, cannabis storage facilities and other relative businesses operating in the state. As of now — even with the new program in place, most cannabis businesses have no choice but to absorb the cost when something goes awry, which can mean losing millions of dollars. No other legalized businesses or industries face that kind of financial risk.
This latest move by the California insurance commissioner follows reports stating that the Trump Administration would refrain from using federal law enforcement against legally operating cannabis businesses in states with medical and adult-use cannabis laws.
The California Department of Insurance hopes to use its experience with getting insurers to write coverage for ride-sharing companies and drivers as a template for this new effort. Ride-sharing was a completely new business model only a few years ago and there used to be no coverage. Now there are 14 commercial carriers writing ride-share insurance for the market. It is hoped that the experience gained with the ride-sharing companies will make it easier for carriers to repeat the process with the cannabis business.
The commissioner admits that although the creation of cannabis insurance will have an undeniable impact in California, there are still major gaps in coverage. One such gap that needs to be filled is crop insurance. But in the end, some coverage is better than no coverage and California is committed to giving the cannabis business the same options as every other business industry in the state.