Marijuana Business Magazine - January 2017

Many Growers Forego Insurance Jones said most cannabis growers don’t purchase crop insurance, largely because they’re “focused on their core business and just want to get up and running.” In addition, those same growers are like many in fire-destroyed California, where much of the crop is cultivated outdoors – and so ineligible for crop insurance. While many cannabis growers don’t want to pay for crop insurance – reason- ing that any claims would be denied – Jones said it’s the cost of doing business. For starters, many outside investors in a company may insist on it. Also, the idea that insurance companies won’t pay claims is wrong. In 2015, for example, Cannabis Insur- ance Solutions paid a $106,000 claim to Cannabis Corp. after thieves used a crow- bar to break into the Denver company’s cultivation facility and swipe the crop. More recently, California Insur- ance Commissioner Dave Jones gave Stockton-based Golden Bear Insurance Co. the green light to start writing poli- cies and offering coverage for cannabis business owners. Jones, in a statement this past fall, did not cite crop insurance. But the com- missioner did say “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.” Find a Good Agent A good agent is invaluable when seeking crop insurance. Even though Cannabis Corp. has such insurance and received a payout, it wasn’t easy to get the underwriter to fund the claim. Cannabis Insurance Solutions jumped into the middle of the dispute and convinced the adjuster to pay the claim. “Insurance adjusters are third-party companies that review the claim and match it to the contract language in the coverage to make sure the claim should be paid,” said Jones of Cannabis Insur- ance Solutions. “Cannabis is new to most of these folks, and they may have some preconceived idea about how operations in cannabis work. It came down to definitions around the type of crop and how the insured was curing the plants. It took some back and forth,” he added. “We produced a docu- ment outlining the definitions, pictures and various processes to ultimately get the crop loss claim approved and fully paid.” That’s why it’s critical to work with a knowledgeable agent who understands the insurance industry and the cannabis business, said Cannabis Corp. CEO Jeff Mascio. “Having a competent insurance agent is absolutely imperative,” he noted. Mascio said the insurance company and its agent both must be intimately familiar with the details of the policy and ensure the insured business is compli- ant with all the conditions spelled out. Mascio’s own crop insurance policy runs hundreds of pages. “If certain criteria were not met, they were not going to cover certain claims,” he added. “The best thing to do is find a competent agency that’s going to focus on all of the details and source all of the different options.” Read the Fine Print The conditions contained in a policy can include everything from how far cameras are from the door to how long video recordings are kept. Other condi- tions are likely to revolve around security and sprinkler systems. “Policies will require that central sta- tion alarms must be on and operational during nonbusiness hours for theft coverage to apply,” said Patrick McMa- namon, founder and managing director of Cannasure Insurance Services, an insurance provider in Westlake, Ohio. “Or they will require that you have one to secure theft coverage.” EXECUTIVE SUMMARY Marijuana growers can purchase crop insurance to protect their crops against loss. Below are tips for what to consider if you want to buy coverage: • A form of crop insurance is available for cannabis growers – provided the plants are cultivated indoors or are inside a facility when the loss occurs. • Find a good agent who is familiar with the details of the policy – and the cannabis industry – to make sure your business is compliant with its conditions. • Read your policy’s fine print so you know what the policy requires; conditions can include everything from how far the cameras are from the door to how long video recordings are kept. • Don’t expect a mainstream insurance company to insure your crops or business. • Consider protecting your company with business interruption insurance in the event of a crop loss. Gerry Jones, managing partner of Cannabis Insurance Solutions, a brokerage in Littleton, Colorado. Photo courtesy of AmyJones Photography Patrick McManamon, founder and managing director of Cannasure Insurance Services in Westlake, Ohio. Photo courtesy of Thomas & Thomas Photography 42 • Marijuana Business Magazine • January 2018