CANNABIS INSURANCE
Cannabis Industry Insurance, You Are Probably Not Covered Today
BY: MICHAEL S. HALE, INSURANCE ATTORNEY, CANNACOVER U. S., LLC
WHEN it comes to buying insurance, the cannabis industry faces unique challenges. As discussed below, a recent decision out of a federal court in Michigan determined that there was no coverage under a property insurance policy where a cannabis business was being operated.
The cannabis industry is new to Michigan and not all insurance companies will write this class of business. Those that do often require specific warranties in applications for insurance which are effectively a guarantee by the insured that certain risk management practices are being observed, such as fire alarms, guards, safety procedures, vaults, and other safeguards.
The traditional insurance policy that would cover a store, a gardener, or a processing company will not work to cover your needs. You need more specific insurance. What’ s worse, if the insurer thinks that you are a gardener or greenhouse, it might attempt to void coverage after a loss when it learns that you are a cannabis business.
In Michigan, the law requires that those applying for a medical marijuana license maintain $ 100,000 in liability coverage including for claims arising out of products. This means that to qualify, you must have products liability coverage which not all insurers writing in this industry will offer. You want to be sure that you have the appropriate coverage in place to not only satisfy the state but also to protect your assets.
Here are some basic suggestions about buying insurance for your cannabis business: 1. Competent Agent. Get a competent agent that is knowledgeable about insurance for the cannabis industry business.
2. Buy Higher Liability Limits Than Those Required By The State.
In Michigan, $ 100,000 in liability coverage is required by the state statute, but this will not go very far to protect most businesses. For example, if there is a fire which causes a death of a tenant working in a cannabis business in your building, $ 100,000 is not likely going to be enough to protect your assets.
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