As you may have heard, a federal court in Colorado just came down with an important marijuana insurance case. The case involves a Cannabis company suing its insurance company for failing to pay on claims and for bad faith. The insurance company denied the claims that fell under their General Liability policy that was to cover their crop and an additional claim for robbery and the damage that was done to the building during the robbery. The insurance company, in denying the claim, went as far as to invoke the federal Controlled Substance Act to argue that it's own policy was an illegal contract. The court, rightly so, kicked that argument back, sending them to arbitration over one fifth of the original claimed amount.

As Cannabis Insurance experts, this makes us crazy. The commercial Cannabis business is complex, involving multiple business types under the same company. It involves buildings, that can be new, owned or leased, heavy capital investment in equipment, crops with six different stages, harvesting production, flowers, oils, infused products, security, legal, transportation and customer facing retail operations. The last thing they need added to the list is a business partner that does not understand or support their complex business needs. Even worse, business partners that fight them at the time when they most need their service.

The complexity of Cannabis business requires an insurance company that focuses solely on the industry. There are a handful of insurance companies that can support these needs, but unfortunately, there many more who try and fit this unique industry into their traditional commercial P&C programs. As we have seen in this lawsuit example, it just doesn't work. There are commercial cannabis insurance experts who work with Cultivators, Dispensaries, Industry Attorneys, Equipment Manufactures, Realtors and have A++ carriers supporting them, adding new and expanding products that can cover each business segment. It is very important that cannabis insurers, as experts in cannabis business coverage, protect the dream of our clients and partners…not sue them.

This case should be the rare exception in our industry and not the rule. Cannabis Insurance Solutions, LLC