Over the past year, the legalization of marijuana in some states has helped many in various ways such as treating ailments or helping small business owners turn a profit. However, due to the fact that marijuana is still considered illegal under federal law, the opportunities for the cannabis industry is not the same as other businesses across the country. The most common example is the lack of financing options available for cannabis industry business owners.
But another thing that this industry is currently being underserved is insurance with many insurance companies denying to underwrite policies for marijuana business owners for the obvious and inherent risks. However, California is looking to change this. Dave Jones, California’s Insurance Commissioner announced a new state program that will be available for cannabis industry business owners called CannaBOP. This package includes fundamental insurance coverage including property insurance and liability insurance for these types of businesses in the cannabis industry:
- Storage facilities
Under the current law, anything that goes awry to a cannabis-based business, the business owners must pay for all the costs totaling to the millions of dollars over the course of the year. But despite things going well in California, the insurance industry across the country does not have these necessary insurance policies available to them. The Trump Administration stated that it would not interfere with states that have opted to legalize marijuana, therefore, now is the time for insurance companies in states that have legalized marijuana to start creating policies.
And while CannaBOP is a step in the right direction, there are still many gaps in coverage including crop insurance. Until the Trump Administration either officially legalizes marijuana on the federal scale, the states will be left to their own devices on how to best handle the insurance crisis facing the cannabis industry.