Growing marijuana for recreational or medical sales is an expensive and risky game. There are a lot of risk factors that can make or break the situation financially, from the loss of crops because of mold, pests or other dangerous toxins that can ruin a plant or an entire crop.
With the commercialization of the marijuana industry moving full steam ahead, it only makes sense that insurance companies would jump on the bandwagon as well.
“Investing time and money into a crop and then having it go to waste is becoming more of an issue for growers trying to stay in the industry to recoup their losses,” said Jason Draizin, CEO of MarijuanaInsurance.net. “By building crop insurance policy we can help those new and existing growers protect their investment.”
The amount of the premium depends on who is offering the insurance coverage.
“Premiums are rated out with sales, what the business is selling and what state the company is selling in,” said Michael Cohen of Holland Capital, an insurance brokerage firm. “We’ve received no claims yet because the vertical is too new. It’s our first year, but inquiries we are getting from marijuana entrepreneurs are robust.”
With the regulation of marijuana sales being different on a state-by-state basis, insurers draft specific coverage to fit the marijuana laws in that state. An example would be in New York state where under the Compassionate Care Act, insurers are not required to cover medical marijuana companies.
“Coverage will be a decision that insurers make on a case-by-case basis,” said Leo Shalit, an attorney who represents marijuana businesses in New York. Insurance companies may take advantage of the fact that the Compassionate Care Act was written specifically for the chronically ill. “New York took a cautious position towards legalizing marijuana,” Cohen said. “It might evolve, but for now insurers will be very comfortable offering coverage to medical marijuana businesses in New York, because the law is progressive and it has risk management out front.”
As marijuana laws continue to evolve across the country, so do the insurance products tailored to the new businesses that are emerging. There is currently no crop insurance for field and hydroponic marijuana in this country. There is traditional commercial insurance that covers dispensary transit, medical malpractice polices for doctors who treat their patients with marijuana, and gap coverage for doctors issuing recommendations rather than traditional prescriptions.
“Insurers are looking into specifically adopting their medical malpractice wording to recommendation rather than prescriptions,” said Cohen. “We’re also offering malpractice policies for lawyers that represent marijuana companies.”
The Internet had spurred the medical industry to mainstream online registration for home delivery in states that allow it. This means those companies offering home delivery with online registration also need cyber insurance.
“With the online threat of hacktivism growing annually, our cyber policy helps regulate the marijuana industry and protect businesses,” said Draizin. (Hacktivism is when hackers access a website or computer system to communicate a political or social message.) Draizin added, “The only difference in a liability policy for a marijuana business is having to pay more in premiums because of a higher risk factor.”
With the face of marijuana changing in this country, it is no surprise that it will inevitably effect most other industries as well.