“Behold the turtle. He makes progress only when he sticks his neck out.” — James Bryant Conant, a 20th century Harvard University president and U.S. ambassador.
Bit by bit, the insurance industry is getting more comfortable with cannabis. This was in evidence this spring as the American Association of Insurance Services, a national not-for-profit insurance advisory organization, filed a Cannabis Business Owners Policy in California. That comes on the heels of the first approved commercial insurance coverage from an admitted commercial insurance company — Golden Bear Insurance — in California last November. Golden Bear is now writing policies and offering coverage for cannabis business owners.
California Insurance Commissioner Dave Jones said at the time that he hoped it would open the door to many more carriers. “Consumers who visit cannabis businesses, workers who work there, businesses who sell products to or rent property to cannabis businesses, and the investors, owners and operators of cannabis businesses all should have insurance coverage available to help them recover when something goes wrong just as any other legalized business does.”
Of course, the insurance industry’s caution was warranted. Even though state after state has enacted laws allowing medical cannabis and even recreational use of marijuana, the federal Controlled Substance Act still prohibits the possession, production or use of cannabis. Although a 2014 amendment gave states more latitude, a memo from Attorney General Jeff Sessions in January was interpreted as giving U.S. attorneys more power to go after federal law violators.
Nonetheless, the train has left the station. Only four states have yet to pass legislation legalizing at least some medical use of cannabis or hemp: Idaho, South Dakota, Nebraska and Kansas. The recreational use by adults, as well as medical cannabis, is legal in nine states and the District of Columbia: Alaska, Washington, Oregon, California, Nevada, Colorado, Vermont, Maine and Massachusetts.
Like you, we remain interested in how this will all unfold. You might find a webinar hosted by the National Association of Insurance Commissioners (NAIC) Center for Insurance Policy and Research (CIPR) and California’s insurance commissioner helpful. It can be replayed by following the link on the right side of this page. This piece in The Insurance Journal explores the potential for captive companies in the cannabis industry.