Entire safes carried out of dispensaries, vehicles smashing through doors, and devastating fires at indoor grow facilities—these aren’t sensational headlines but real-world examples of cannabis-related claims faced by insurers. At Insurance Journal’s annual Insuring Cannabis Summit, a panel of experts explored today’s most pressing issues for the legal cannabis insurance market, focusing on how carriers can navigate this unique risk landscape.
From cultivation to cash registers, the world of cannabis-related claims presents challenges unlike those of traditional businesses. Beth Ossino, claims manager at Golden Bear Insurance Company, highlighted theft and robbery as the leading exposures she encounters. She recalled incidents where thieves removed entire safes or drove trucks through roll-up doors to steal harvested crops dramatic scenarios that still fall under the umbrella of cannabis-related claims.
Non-compliance with wired alarms, sprinklers, or record-keeping requirements can derail business interruption recoveries, creating yet more cannabis-related claims headaches. Underwriters like Michael Kirk of Cannasure Insurance Services also look closely at cultivation risks. He noted that LED lighting systems significantly reduce fire hazards compared to traditional bulbs meaning fewer potential cannabis-related claims for growers who invest in safer technology.
Michael DeNault of World Insurance Associates added that while LEDs themselves are cooler, their power drivers can overheat if installed inside grow rooms. His team has seen new driverless or remote-driver systems mitigate that risk, potentially lowering future cannabis-related claims. Separately ventilated grow rooms can also keep smoke from damaging neighboring crops, which can prevent catastrophic multi-room losses.
Another major factor behind cannabis-related claims is the cash-heavy nature of the industry. Because many banks refuse cannabis accounts under federal law, dispensaries and cultivators remain attractive targets for crime. Ossino described a large insured in Oakland forced to rent an armored truck quarterly to deliver tax payments an arrangement rife with potential cannabis-related claims if security fails.
The SAFER Banking Act, now before Congress, could ease these pressures by letting banks and insurers serve state-legal cannabis companies without fear of federal liability. Panelists believe passage would reduce crime and therefore cut down on costly cannabis-related claims across the sector.
Finally, cannabis lounges present their own property and liability exposures, especially when food service or live events are involved. Insurers are already building questionnaires and safeguards to anticipate future cannabis-related claims from these new venues. As legalization expands, so too will the need for specialized risk management strategies to handle the next generation of cannabis-related claims.
