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Cannabis: the new insurance frontier
Cannabis: the new insurance frontier | Insurance Business
Insuring the marijuana industry is a new frontier – with growers and producers constantly innovating, and regulation differing across the country. It's opportunistic, but that's what makes it interesting.
Jodi Faulkner and Travis Blackford, at Hull & Co, have been occupying the marijuana space since 2007 and, though the industry is growing with every new state that legalizes the drug, they say the cannabis insurance environment seems to be forever in flux.
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It's a new arena, Blackford says, but that's part of what makes it exciting.
"Right now, it's definitely opportunistic, the space in general," he says. "We feel like we're in a pretty strong position to continue to be able to be viable as this opportunistic environment continues to expand, even given all the challenges that we face. But it obviously is challenging from a capacity standpoint, just with limited carriers."
The inherent creativity in the industry also creates challenges, he says. The marijuana industry is evolving and innovating incredibly quickly.
"You have folks that are extremely creative. Now you can basically go into a room and there's a buffet of different strands with different levels that have different effects. You have technologies that continue to change … so it's interesting: from technology, to the products, and then you have the consumer on the end of that. It's crazy what the industry is doing.
So while cannabis manufacturers continually innovate their processes, the insurers backing them have to also continue to be dynamic and adapt to the changes as they happen.
"What's kind of neat about the industry right now, and we've experienced it here in our office working with some of the carriers that we have, is that we've had a claim that happens and that we didn't anticipate – we couldn't anticipate – [and] we pay out the claim," Blackford says. "Then we work with the carrier and legal team to then manuscript a document to protect the carrier from having to pay that claim ever again, because that really wasn't the intention of what we were trying to cover. But you don't know what you don't know."
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And while it can seem "unsettling" at times, all of this nevertheless makes marijuana insurance a positive space, Faulkner says.
"It's obviously a growing market, as more and more states get on," she says. "There's very few [insurance firms] that specialize in it, that are capturing a share of the market – there's probably four or five, us being one of them – that are well-known in the industry and have a good-sized book.
"We are insuring everything – we have the capabilities for – everything from the buildings; I have some markets that will offer crops, but really just for fire; liability side; product liability side; excess; their auto; their transit; from the grower to the dispensary to their suppliers; all of that."
However, the confusing legislative nature of the industry – whereby it's legal in some states but still considered illegal at the federal level – also has its problems, Faulkner says.
"And with a new president, you never know how they view it," Faulkner says." Trump has kind of given us some issues at the moment. He's not for the recreational side of it. Those are the challenges."
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