The marijuana industry’s shady past and current illegal status at the federal level have kept most insurance companies from offering policies to the new industry. “Few and far between,” is the way Paul Warshaw CEO of GreenRush in California describes the options. His technology company works with more than fifty medical marijuana dispensaries and he says many of them do not have all the coverage they need.
Slowly though, things are beginning to change. Insurance carriers are approaching the new marijuana landscape “with caution,” and are beginning to offer coverage according to Gerry Finley, Senior Vice President Casualty Underwriting, at Munich Reinsurance America.
As insurance carriers begin to examine the industry, several “have indicated a willingness to provide a broad array of property and casualty coverages to those in the marijuana business, albeit with robust pricing,” Finley said. Risk factors associated with the legal cannabis industry include theft because many businesses deal mainly in cash, he said, as well as potential pollution if the customer is a grower/processor, and neighbor complaints.
Adam Weiss and Spencer Uniss, are founders of the six year old company Bolder Cannabis and Extracts. They employ 60 people to grow marijuana, process it and sell it to stores around Colorado, including two that they own. The company maintains an array of coverage including liability, workers compensation, health insurance for their management team and product coverage. Weiss notes his insurance prices may be higher than those of non-cannabis businesses because, “insurance companies don’t have much competition in this industry and can charge a lot.”
Greg Warme, owner of Bondi Farms in Washington State employs fourteen people and sold his first marijuana crop earlier this year. He also found that while he did not have problems getting coverage, his insurance agent offered only a few options and told him that his rates were “high compared to companies outside this industry.”
Options are increasing though Weiss said. “We’re seeing more of the big name players enter the market now that they’ve seen others dip their toe in successfully,” he said.
Prices may come down for another reason said Uniss. “As insurers see companies like ours operating in a responsible, compliant way, and they can collect real data, they can get a better picture of the actual risks they are taking,” he said.
At least one large player however, Lloyds of London, has decided to not to renew policies in the industry until marijuana is legal at the federal level. That has been a big blow to many businesses who were using them, according to Warshaw.
Warshaw’s GreenRush is a technology company that offers ordering and delivery scheduling software to medical marijuana dispensaries in California. His business does not “touch the plant,” and is treated as a more traditional client from an insurance standpoint he said.
Health insurers seem to be treating marijuana use the same whether it is legal or not. Frequency of use and impairment most concern insurers according to Bill Moore, Vice President of Underwriting and Medical for Munich American Reassurance Company, a unit of Munich Re. If the use is medical he said, the insurer would be concerned about “the risks of the underlying disease or condition.” In that case, “medical marijuana usage becomes the treatment and as such is not that significant.” he said.
A recent poll paints a more complete picture. Of insurance underwriters surveyed recently at the Association of Home Office Underwriters (AHOU) Annual Conference in Washington, D.C., 43 percent of respondents said frequency of use was the most important factor when underwriting marijuana users, followed by an individual’s medical history (37 percent), age (14 percent), and current state of health (6 percent). Forty-three percent felt smoking marijuana presented more risks than ingesting it, while only 8 percent viewed ingesting marijuana as more risky. Most insurers had policies regarding marijuana and many of those that didn’t, planned on adding them soon.
When Weiss and Uniss researched health insurance plans for their company, they found that the rates would be no higher for their Bolder Cannabis and Extracts employees than for company employees who did not work in a marijuana business. “That’s an area where so far, we just have to pay standard rates.”
Still, old stereotypes remain. Lynnette Anderson, a paramedical examiner, asks potential insurance customers a battery of lifestyle questions including if they have used or tested positive for marijuana, cocaine, heroin or other hallucinogens. “Marijuana is still on the list with the hard drugs,” she said, not asked about in the cigarettes or alcohol sections.