Marijuana Insurance: The Business of Underwriting Cannabis

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You know business is booming when insurance folks come knocking at your door. As with any business, cannabis companies must be insured, and Statewide Insurance is leading the way into uncharted territory.

According to its Medical Marijuana Specialty Division, Statewide provides “the only, nationally available insurance coverage designed specifically for the medical marijuana industry.” In fact, the division has a staff of about 10 and a dedicated cannabis point person whose role involves talking to industry leaders nationwide. It insures businesses in the 14 states with medical marijuana laws and is poised to enter other states if they legalize medical marijuana.

Though other insurance companies have been known to cover medical marijuana thefts and seizures, these situations arise more on a case-by-case basis. Marijuana plants sometimes are covered under “trees, shrubs, plants and lawns” sections of homeowner’s or renter’s policies.

Statewide, on the other hand, has policies specifically designed for the plants and the infrastructure they require. This may come as a relief to residents and small business owners whose only other recourse might be to arm themselves to the teeth and pray that their special, and valuable, crop flies under the radar of would-be thieves.

Michael Aberle, national director of the Medical Marijuana Division, said Statewide provides enhanced coverage, but also demands a lot. For example, the company requires enhanced security systems, such as specialized safes and cameras on all doors indoors and out.

“If it’s cannabis-related, we cover it,” Aberle said. “We built programs for this industry. We’re getting involved, we’re out there working with industry leaders and trying to create better business practices.”

Such involvement is raising the bar in safety standards. Because of its requirements, dispensaries are safer: They have better lighting, better all-around security and are less likely to become victims of crime. Aberle said city officials are asking to see Statewide’s underwriting policies so they can draft better ordinances around cannabis businesses.

So what is covered?

Statewide insures everything from property and crop loss and spoilage to cannabis edibles and the kitchens they are baked in. Statewide will cover growers, landlords of properties with grow operations or dispensaries, contractors building hydroponic systems and grow rooms, cyber-info systems and even theft by employees. The company offers workman’s compensation insurance, auto insurance for cannabis delivery services, employment practices liability insurance (EPLI) and doctors’ malpractice insurance.

Statewide even provides event coverage, including for the upcoming International Cannabis and Hemp Expo in April at San Francisco’s Cow Palace, which will be the first event to allow people to medicate on site.

“This is monumental,” said Aberle, of the freedom accorded to expo attendees, as well as the scale of the insurance venture, “not just for the cannabis industry, but in terms of insurance coverage.”

Aberle declined to discuss how much medical marijuana insurance is worth to Statewide. But, with hundreds of new dispensaries emerging and annual premiums ranging from $500 to $10,000, it’s safe to say that the business of insuring medical cannabis may reach into the millions.

Stay tuned for the final installment. See previous posts in this series here and here.

(Editor’s note: This is the fifth piece in a six-part series that was first published on Oakland Local on the business of marijuana. This story was funded with the help of Spot.us, a crowd-funding non-profit that has helps raise money for independent journalism. For more information on Spot.us visit their site, where you can support quality journalism.)