“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.”
3. Be Very Careful With
Applications For Insurance.
You want to fully disclose to insurance
companies the type of cannabis business
you are engaging in or will be engaging in.
Growers, processors, and dispensers all
present different exposures. Insurance
companies are not shy about denying
coverage where they believe there was
a misrepresentation by the insured as to
what the exposures were. We see this all
the time in our law practice.
In a November 8, 2017, decision from
a federal court in Michigan, a building
that was intended to be used for general
office or light industrial was damaged
when the tenants to whom the property
was leased used the property to grow
marijuana. The landlord, who was the
insured, was not aware of the marijuana-
growing operations of the tenant.
After being advised of the damage, the
insurance company denied coverage
citing the “illegal/dishonest acts”
exclusion in its policy, which precludes
coverage for damage caused by a
“dishonest or criminal act by … anyone
to whom you entrust the property for
any purpose.”
Thus, even though the landlord who
bought the insurance policy did not know
that the tenant was engaged in an illegal
activity, coverage was still barred under
that applicable policy.
Crops, And Finished Product.
Most standard business property
insurance policies substantially limit
coverage for growing crops and plants.
However, specialized insurance is
available to cover this.
5. Be Sure That Any Safeguards
Required By The Insurance Company
Are Being Complied With.
If a fire sprinkler is required, be sure it
is in place and working. The same for an
alarm system. If there are warranties in
the policy about safes or guards, be sure
you are observing those.
Michael S. Hale
Michael S. Hale, J.D., CPCU, AAI, is a
principal in the firm of CannaCover U.S.,
LLC, an insurance agency which offers
insurance and risk management services
for companies in the cannabis industry.
Michael can be reached at mhale@canna-
cover.com / 248-321-8941.
4. Be Sure You Have Specialized
Coverage For Living Plants, Growing
INSURANCE & RISK MANAGEMENT FOR THE CANNABIS INDUSTRY
INSURANCE AND RISK MANAGEMENT FOR THE CANNABIS INDUSTRY
We understand the cannabis insurance market and offer specialized business insurance programs for
growers, distributors, sellers, landlords and tenants.
SPECIAL PROGRAMS
for
3
M BOA Members
CONNECT WITH US
QUICK QUOTES
for Liability Coverage
Required by
Various States
[email protected]
SPECIALIZED
PROPERTY INSURANCE
for Plants and
Finished Product
CannaCover U.S.
21500 Haggerty Rd. | Suite 140 | Northville, MI 48167
(248) 321 – 8941
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