What you need to know about Cannabis Insurance in California

September 11, 2019


Marijuana has become widely accepted; almost half of Americans supports its legalization. This issue is impacting industries, government and even insurance. With the increased number of users the demand for cannabis is progressively increasing. At present, only 11 states have legalized recreational marijuana use with another 22 having legalized some form of medical marijuana use.  In the balance of the 12 states, it is still illegal to use marijuana in any form and the need and desire for cannabis is growing significantly. The division between the state and federal status makes it difficult for businesses to receive comprehensive, affordable coverage and often leaves policyholders with restrictive plans.

The newly created National Association of Insurance Commissioner (NAIC) states that Cannabis Insurance Working Group will review the insurance regulatory issues encircling the legalized cannabis business from seed to sale, including workers’ compensation issues, availability, and scope of coverage, and consumer information and protection. The working group will also initiate a white paper outlining the problems and make appropriate suggestions for the development of regulatory guidance.

California Commissioner of Insurance, Dave Jones, launched an initiative last year to motivate admitted commercial insurance businesses to fill coverage gaps for the cannabis industry. He even held a first-in-the-nation public hearing to pick out insurance gaps faced by the cannabis industry. Spokespersons of cannabis businesses and the insurance industry testified about the limited availability of insurance for cannabis businesses. Jones also announced that he had directed Department staff to devote the resources necessary to timely review the cannabis product and rate filings.

“We all know that cannabis businesses face insurance coverage gaps and insurance availability which means that those who shop, works, sell goods or services, owns, invest, or operates cannabis businesses may not have access to insurance that helps them recover if there are accidents, property damage, injuries or any of the things insurance typically covers.”

“As state insurance regulators, one of our duties is to understand new legal businesses and their insurance needs, then work to encourage the accessibility of insurances to meet these new risks and coverage needed.”

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