Count this among the ways that a changing world is impacting independent insurance agents:
The legal cannabis industry, which includes both marijuana and hemp businesses, is growing at a rate of roughly 25% a year, according to one industry group.
Legal weed may now be too big to fail, despite the the hard line anti-marijuana rhetoric furthered by Attorney General Jeff Sessions. That also makes the cannabis industry a new frontier in insurance.
Too big to fail
"The reality is, the cannabis industry generates hundreds of millions of dollars in tax revenue, and employs tens of thousands, if not hundreds of thousands of people across the country," said Patrick McManamon, managing director of the Cleveland-based broker Cannasure Insurance Services, during a recent interview with PC360.
Since 2010, Cannasure has focused exclusively on providing business insurance solutions for the cannabis industry. "I think it's very difficult for any politician to try to come in and take those jobs away and replace that tax revenue," McManamon said.
Related: Marijuana: An emerging coverage risk
Marijuana Business Daily has reported that legal pot businesses now employ between 100,000 to 150,000 workers nationwide. Cannabis businesses are expected to create more than 250,000 jobs in the next three years, according to Forbes and New Frontier Data. That same research found that legal marijuana accounted for $6.6 billion in nationwide sales last year.
"Eventually, it is going to become fully legalized on a federal level," says John Morgan, chief operations officer for Simplifya, a company that sells cannabis industry compliance software that enables individual business owners to complete regular audits and adjust procedures that may not be in line with local and state marijuana laws.
"Companies that subscribe to Simplifya are showing that they care about their compliance, and they're getting solutions to restore or resolve compliance issues," Morgan said. "Underwriters really like that."
Simplifya enables cannabis businesses, law firms, consultants, financial institutions, and regulatory agencies to monitor licensee operations for compliance with state and local regulations. (Video: YouTube)
Risky business
Cannabis, to be sure, is a complex industry with distinct business insurance needs. Consider that while marijuana or hemp cultivation facilities have more property and inventory-on-hand than retail dispensaries, the latter have a potentially higher risk for theft and vandalism.
There may also be professional liability exposure in cannabis stores because some budtenders provide product recommendations and advice.
"This is a business where a $12 an hour frontline employee can cause significant problems for a multi-million dollar company," says Jordan Wellington, director of compliance for the cannabis industry lawfirm Vicente Sederberg, in the video posted above.
Cannasure teamed up with Simplifya so that clients can more easily track the many compliance loopholes that may impact insured marijuana business owners.
"This industry is highly regulated, and changes happen all the time," McManamon said. "It's really helpful when you have a simple, creative, robust compliance software solution."
Cannasure clients who subscribe to Simplifya receive a discount on the software service, and, eventually, on their insurance.
"Depending on how large you are, at the end of the day, those could be very large discounts," McManamon said.
McManamon and his partners started selling individual cannabis business insurance policies in 2010, having come to the vertical via a shrinking medical malpractice insurance book, and a family legacy of insurance of agents that's three generations deep. Cannasure has since evolved into a wholesale cannabis business insurance distributor.
"We looked at it and thought, if businessowners are compliant, they're probably a much smaller risk than somebody who's not," he said of the Simplifya partnership. It also reflects Cannasure's commitment to remain in step with the issues the impact cannabis business owners.
"This industry changes every couple months with new technology and new states coming on line," McManamon said. With the help of technology solutions such as Simlifya, "we're making sure that we're in front of those issues."
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