Filed Under:Markets, E&S/Specialty

Calif. insurance commissioner approves first commercial cannibis insurer

Action follows launch of initiative to encourage insurers

Different types of marijuana are displayed at Sparc Dispensary, Nov. 8, 2016, in San Francisco. (Photo: AP/Marcio Jose Sanchez)
Different types of marijuana are displayed at Sparc Dispensary, Nov. 8, 2016, in San Francisco. (Photo: AP/Marcio Jose Sanchez)

Even though cannabis is legal in your state, it still may be difficult for a business that sells cannabis to the public for recreational or medicinal use to obtain insurance that covers the business needs.

Now, in California, Insurance Commissioner Dave Jones has approved the filing of the first admitted commercial insurance company to file cannabis business insurance. Cannabis businesses licensed by the state may purchase commercial insurance coverage from the insurance company licensed specifically to sell cannabis coverage. That insurer can begin writing policies and offering coverage for cannabis business owners as of Nov. 3, 2017.

Related: Marijuana growers at risk of being wiped out by California fires

“This is the first of what I hope will be many commercial carriers filing insurance products to fill insurance coverage gaps for the cannabis industry,” said Jones. “Consumers who visit cannabis businesses, workers who work there, businesses who sell products to or rent property to cannabis businesses, and the investors, owners and operators of cannabis businesses all should have insurance coverage available to help them recover when something goes wrong just as any other legalized business does.”

Cannabis initiative encourages insurers


Recognizing the need, Jones launched an initiative earlier this year to encourage commercial insurance companies to write insurance to fill coverage gaps for the cannabis industry. He sees this first filing and approval of commercial insurance for the cannabis industry as a successful result of his initiative.

To be sure that all stakeholders understood the issues, Jones brought together commercial insurance company executives and cannabis business owners to educate the insurance industry about the sophistication, professionalism and risk management of the cannabis industry. In addition, Jones organized tours for insurance executives at cannabis businesses.

On Oct. 19, Jones held a “first in the nation” public hearing to identify insurance gaps faced by the cannabis industry. At the hearing, cannabis businesses and insurance industry representatives testified about the limited availability of insurance for cannabis businesses.

It quickly became clear that although there is insurance available from surplus lines insurers, insurance coverage is limited in scope, and commercial carriers were not yet writing insurance. With the announcement of the department’s approval, that situation will change. To help speed the process, Jones also announced that department staff would be allocated to cannabis insurance filings.

“Our mission remains insurance protection for all Californians, which includes insurance for California’s legalized cannabis businesses and customers. We encourage more insurance companies to file cannabis business insurance products with the department to meet the needs of this emerging market,” Jones added.

More information on the Cannabis and Insurance Initiative is available at the California Department of Insurance website. The site also includes a list of agents and brokers authorized to sell cannabis insurance in California.

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