Insuring Cannabis Businesses – Issues and Problems

Illustrate a cannabis plant

Insuring cannabis businesses can be problematic. During the course of the past two years, I’ve written several new insurance continuing education (CE) online and webinar courses for my client, A.D. Banker & Company. One of the most recent webinars is Insuring Cannabis Risks.

The course is the brainchild of inquiries submitted by individuals who attended a free monthly webinar I co-host with A.D. Banker vice president, Pam Reihs. During each 1-hour Insurance Trends Webinar, Pam and I talk about insurance topics of current relevancy. How to insure cannabis businesses is always at the top of the list. Questions we often receive are:

  • Why isn’t cannabis/marijuana legal in all the states?
  • In what states IS marijuana legal?
  • What about hemp, that’s legal, isn’t it?
  • Why is it so hard for cannabis businesses to establish relationships with banks and credit card companies?
  • What insurance companies write insurance for cannabis businesses?

The insurance CE webinar answers these and other questions for licensed insurance professionals. I recently wrote two blog posts for A.D. Banker that summarizes the most important information contained in the course. So, for you insurance and non-insurance people alike, feel free to visit those blog posts:

Check back as I provide ongoing updates about this evolving insurance marketplace. To register for the insurance CE webinar, click here. You can find my insurance webinar schedule here.

SILA Foundation Webinar

I’m honored to have been asked by the SILA Foundation to develop and present a webinar for their monthly series.

The webinar will be presented live on Thursday, May 21 at 3 p.m. Eastern time. The topic is: Insuring Cannabis Risks.

Click here to register: https://www.silafoundation.org/2020/05/webinar-insuring-cannabis-risks/

Cannabis in the Insurance Industry

Because the federal government classifies marijuana under Schedule I of the Controlled Substances Act, its cultivation, possession, use, and distribution is illegal under federal law. Not all the states agree with the federal government.

11 states have legalized the recreational use of marijuana, 35 states have legalized medical marijuana programs, and many of the remaining states are considering doing one or both.

One of the biggest problems faced by those working in the cannabis industry–and insurance companies and agents working with those businesses–relates to money. Because cannabis businesses are considered illegal operations by the federal government, federally regulated banks won’t do business with them. A number of federal laws–including RICO and money laundering statutes–impose reporting restrictions and penalties on banks who don’t comply. Because these banks are concerned about repercussions by the federal government, they won’t open accounts for anyone in the cannabis industry.

Some local and county banks have been working with cannabis business in states that have legalized marijuana but the majority of these business deal strictly in cash, and face many challenges because they have a great deal of cash on hand. When a cannabis business can obtain insurance, the carrier will require specific and strict conditions to be met in connection with security … because of the crime exposure. Criminals targeting cannabis businesses are far more interested in finding cash than they are pot plants.

For more information about this topic, listen to today’s podcast, or check out any of the following resources: