Options are becoming much more widely available including coverage from top carriers.
One year ago, cannabis business insurance coverage options were few and far between. Now that 2019 is getting started, these companies already have far more opportunities to obtain insurance. Moreover, many top carriers are among those selling products in this market.
This niche had once been covered nearly exclusively by start-up insurers, but the trend has changed.
A growing number of states have legalized cannabis. Accordingly, selling cannabis business insurance has become far more appealing to insurers of all sizes. This has made it much easier for those companies to obtain the coverage they need to mitigate the many risks associated with operating a business.
Still, federal illegality of cannabis remains a hurdle. This has meant that despite the fact that many insurance companies are entering into this marketplace, coverage is sold in the form of excess and surplus lines coverage as opposed to being included in standard lines. Cultivators, dispensaries and consultants now have much more widely available options but there remains a substantial distance to travel.
Cannabis business insurance has not reached the point that it fits within a standard coverage format.
Despite the fact that these cannabis businesses are being covered by traditional forms of coverage, they cannot be included in the standard policy. This remains the case despite the fact that the businesses don’t necessarily offer any more risk than any other comparable market. Moreover, the industry is hardly a new one. However, the fat that marijuana is illegal on a federal level has required insurance companies to be creative in their methods of selling coverage.
Still, even though the cannabis business is neither new nor all that risky, it fits only within the excess and surplus lines at the moment. Though many cannabis business owners are glad to have coverage more easily and affordably available to them, they remain frustrated that they must purchase from lines that are typically reserved for policyholders that have unique or high risks or that have poor loss histories associated with them.
As a result, cannabis business insurance is another challenge still faced by companies that also struggle to obtain traditional access to banking products and services and that cannot make tax deductions, even within the states where marijuana has been legalized.