Page 13 - February2017

INDUSTRY

Marijuana Insurance Industry Growing Like

Weeds

By Will Koblensky

It’s an emerging market segment sweeping the nation, so Denver-based legal firm Vicente-Sederberg advises
Insurance Business asked America’s pioneering marijuana governments and businesses both inside and outside
insurer, and its largest cannabis legal firm, what industry America and founding partner, Brian Vicente, said
insiders need to know. understanding what rules apply where is vital for new
entrants.
Next Wave Insurance launched what it calls a “seed to
sale” cannabis coverage program before Lloyd’s of London “Of all the states that have these medical marijuana and
entered and exited weed underwriting. recreational marijuana laws, they are essentially dual
licensing,” Vicente said. “So any marijuana business that
The San Diego-based company offers policies for crops, an insurer would want to work with has to have a license
indoor cultivation, retailers, laboratories and the company’s from both the state and local government.”
CEO Jeff Ward said it is the only insurer offering coverage
for product recalls. In the 28 states with medical marijuana regulations and the
eight states where recreational cannabis is legal, two sets of
While theft and vandalism make up a significant portion rules apply in every jurisdiction, Vicente explained.
of claims made to Next Wave, electrical fires from 23 watt
bulbs overheating in grow-ops, and equipment breakdown The intricacy of the industry requires a fair amount of
generally, also account for the largest share of losses. training, especially for those growing and distributing the
cannabis itself, as well as for the insurers.
However, the largest exposure cannabis companies face,
be they growers or shop owners, is having inadequate Both Vicente and Ward agreed a lack of access to
coverage offered by insurers with marijuana exclusions, federally regulated banks created major insurance issues
Next Wave said. for marijuana companies because of the risk involved
with storing large quantities of cash and paying premiums
“In terms of limits, in terms of forms, we see other markets through alternative methods.
out there with really poor policy language that, even
though they’re allegedly offering coverage, they have a lot They differed, however, on their perception of insurers’
of ways to deny coverage,” Ward said. warmth to weed, with Vicente arguing carriers were kinder
than banks and Ward saying there’s still apprehension in
Charles Pyfrom, senior vice president of commercial the market.
programs at Next Wave underwrote the company’s
cannabis program and said it was “imperative” new Other than banking, federal regulations haven’t affected
markets like marijuana come with clarity. Next Wave’s clients much other than preventing them from
“We want to make sure they (policyholders) are not being shipping across state lines, Ward said.
misled or having so many exclusions they’re not going
to actually have coverage by the time they have a loss,” Vicente wasn’t sure what the Trump administration would
Pyfrom said. mean for those regulations and Ward mentioned the
incoming President’s pick for Attorney General didn’t look
“Having been on the carrier side for the past 10-plus promising for marijuana advocates.
years, I spent a lot of time making sure the verbiage was
specifically tailored to whatever the type of exposure we
were looking to cover.” Reprinted from IBA magazine

Considering legality issues are paramount in all things
cannabis, marijuana lawyers are a fundamental part of the
industry.

february 2017 insight 13