N<\/span>ot long ago, the marijuana industry had some of the best insurance coverage in the world.<\/p>\n Cannabis firms were doing business with Lloyd\u2019s of London, one of the oldest names in the underwriting world, until May of 2015, when the firm abruptly quit.<\/a> Existing policies would not be renewed, and new policies would not be taken, Lloyd\u2019s announced in a May 29, 2015 letter to its partners.<\/p>\n Lloyd\u2019s cited the most obvious and well-worn justification as reason why \u2014 the age-old conflicts between state and U.S. federal law on marijuana \u2014 but observers in the insurance world were still left scratching their heads at the suddenness, and at the reasoning. Something was off.<\/p>\n At the time, the Obama Administration\u2019s Justice Department had announced it would not prosecute financial institutions <\/a>offering services to licensed businesses in states with medical-marijuana laws.<\/p>\n It seemed insurers were in the clear. Did Lloyd\u2019s receive a secret, off-book warning from the feds, or did the firm reassess risk and decide insuring marijuana simply wasn\u2019t profitable? \u201cNobody knows,\u201d Sacramento, Calif.-based Mike Aberle, senior vice president of Next Wave Insurance Services,\u00a0told\u00a0Insurance Journal<\/a>\u00a0<\/em>at the time.<\/p>\n \u201cThat\u2019s the really curious part right now,\u201d he said. \u201cNobody really knows what\u2019s going on except the guys in London.\u201d<\/p>\n It\u2019s worthwhile to revisit this incident when considering the situation now, following the deadliest and potentially most costly fires<\/a> in California history.<\/p>\n Damage is still being assessed and the full extent won\u2019t be known for months, but it\u2019s obvious the fires in Sonoma, Mendocino and Napa counties have dealt a considerable blow<\/a> to the still-emerging marijuana industry in the region.<\/p>\n At least three dozen marijuana cultivation operations have been burnt out completely or withstood damage from smoke and ash possibly tainted with toxic chemicals like benzene. And unlike the thousands of homeowners whose houses and personal effects were reduced to ash, most cannabis businesses did not have any kind of insurance coverage.<\/p>\n \u201cWe\u2019ve lost millions of dollars of product for sure,\u201d Ned Fussell, CEO of Santa Rosa-based CannaCraft, one of the state\u2019s biggest producers of cannabis oil and vape-pen cartridges\u00a0told Marketplace<\/a>. \u201cAnd we have no insurance.\u201d<\/p>\n Most reporting on this situation has repeated a similar line: marijuana businesses aren\u2019t eligible for insurance covering their crops, their harvests, their equipment and their buildings. That\u2019s not wholly true.<\/p>\n<\/blockquote>\n It\u2019s not entirely accurate to say that marijuana growers can\u2019t get insurance.\u00a0They can<\/a>. It\u2019s just not very good \u2014 and it\u2019s not necessarily affordable. That\u2019s not the insurance companies\u2019 fault \u2014 and it\u2019s not the federal government\u2019s fault, either. Not directly.<\/p>\n Before the fire,\u00a0some measure of coverage was available to marijuana businesses,<\/a>\u00a0but it was limited and it was expensive, and it wasn\u2019t available from any of the major commercial carriers active on the state\u2019s regulated insurance marketplace \u2014 obvious problems brought up by California state Insurance Commissioner Dave Jones numerous times before the blaze. (Warning: insurance wonkiness ahead.)<\/p>\n As Jones noted in June<\/a>, the coverage that was available was bought on what\u2019s called the \u201csurplus-line market,\u201d an insurance exchange for high-risk ventures already rejected for coverage by mainstream, major carriers.<\/p>\n This was a known problem and one state authorities and the marijuana industry were both trying to correct \u2014 to no avail.<\/p>\n For months, Jones has been publicly exhorting carriers <\/a>to enter the state-regulated insurance marketplace and cover marijuana, and has gone to great lengths to do so.<\/p>\n He\u2019s organized tours of weed businesses for insurance executives. He\u2019s reminded them than cannabis is a $6 billion business now, and could be a $25 billion business in four or five years. There are great gobs of money to be made, Jones is saying to anyone who will listen.<\/p>\n But then and now, major insurance companies have declined.<\/p>\n \u201cInsurance companies are conservative in nature,\u201d Los Angeles-based attorney Ian Stewart explained to The Cannifornian<\/a> at the time. \u201cBefore entering any new market, they want to have the law of large numbers on their side, meaning they are able to study the trends and loss ratios of the different classes of business in the industry. This way they establish pricing models to rate the business according to the risk while still remaining profitable.\u201d<\/p>\n Put another way: The cannabis sector wanted insurance. And the state\u2019s regulated insurance marketplace, which oversees and sets ground rules for policies covering Californians\u2019 cars, homes, lives, boats \u2014 you name it, welcomed the largest insurance companies and others to underwrite marijuana operations, but it was the insurance industry who decided weed was too costly, too difficult or too new to underwrite \u2014 a negative declaration never made officially, but made collectively.<\/p>\n Then the fires came, a worst-case scenario that made the scope of the problem obvious \u2014 if not its causes.<\/p>\n Jones believes that marijuana operations can be insured in the same way he convinced auto insurance companies to start writing policies for Uber and Lyft drivers. Maybe he\u2019s right \u2014 but he\u2019s yet to make an argument compelling enough to make the first big firm take that first giant step.<\/p>\n TELL US,<\/strong> do you think insurance companies should support cannabis companies?<\/p>\n The post Insurance Companies, Not Laws, Are Preventing Widespread Cannabis Insurance<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
In the aftermath of the deadly California fires, the lack of insurance in the cannabis industry became devastatingly clear. Not long ago, the marijuana industry had some of the best insurance coverage in the world. Cannabis firms were doing business with Lloyd\u2019s of London, one of the oldest names inContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50,459,80,170,1961],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/20755"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=20755"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/20755\/revisions"}],"predecessor-version":[{"id":20756,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/20755\/revisions\/20756"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=20755"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=20755"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=20755"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nRead More: Insurance Companies, Not Laws, Are Preventing Widespread Cannabis Insurance<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"