Legal marijuana pushes Colorado broker to new heights

Federal Health Minister Jane Philpott's plans may have caused a stir, but insurers may reap the rewards, based on Colorado’s success

Insurance News


Legalization for marijuana may be on the horizon in Canada, but it’s hazy as to how the new legislation will be implemented – and what the resulting impact on the insurance industry will be.
However, Canadian insurers do have a precedent to look to in Colorado, which legalized the drug in 2013. Local insurance professional Julius Birch “J.B.” Woods, owner of Parker, Colo.-based Greenpoint Insurance – one of the only cannabis-focused independent insurance agencies in the country – says he can barely keep up with demand. He can already report a premium volume of 140% over last year.

But the road to success didn’t come without its share of sweat, blood and tears, however—it would take a 1,000-mile move, a question from a reticent client and a tremendous leap of faith on the part of the Woods family before Greenpoint would become the major market player it is today.

Woods’ story provides a fascinating framework for how independent agencies in dire need of a unique angle can find a niche and capitalize on it.

Woods was 10 years out of Rutgers University when he first caught the insurance bug. Living with his wife, Mary, in Los Angeles, Woods began to envy the independent lifestyle of his neighbor, an insurance salesman.

Chasing a bit of that perceived glamor, Woods took a job with Northwestern Mutual and began selling life insurance. He left three years later for an exclusive agent position with Allstate, a role he would hold until 2009, when he and Mary opened Greenpoint.

It was during his time with Allstate that he and his family decided to move to Colorado.

Despite appreciating the space and freedom of his new home state, Woods was beginning to feel restless in the life of a captive agent. He wanted more—so he decided to open an independent agency.

He had barely opened his office doors in Parker, a mid-sized town just 30 minutes southeast of Denver, when a call came that would change his professional life forever.

“My very first client was a man who had been illegally growing weed out of his basement for years, and now wanted to lease space in a commercial warehouse,” says Woods. “I remember him being very reluctant, very shy and discreet, but he saw his opportunity and wanted to take a chance with his business. So I started doing the research.”

Woods came back days later with documentation and a backing carrier. His client paid in cash, and Woods bound the policy that earned him $100 a year. It was then that the germ of an idea that would eventually form Greenpoint began to take shape.

Despite having never used marijuana himself (a practice he still maintains today), Woods began to research the viability of a specialized cannabis insurance agency. Alongside Mary, he made countless phone calls to underwriting groups willing to insure medical marijuana operations.

Major carriers were obviously uninterested, so Woods relied on boutique groups and E&S markets that had formed in California, where medical marijuana had been legal since 1996—companies he describes as “willing to step out on a ledge.” That’s changed somewhat today, and Woods reports seeing more interest trickle in from large, recognizable carriers.

Despite the relative lack of appetite, however, Woods warns against taking what’s on offer without looking into the history and financial stability of a provider.

“In this industry, you want to partner with groups that have some experience doing this,” he says. “Otherwise what you’ll see is someone jumping in and as soon as they get a claim, they jump back out. We’ve seen it before.”

Coupled with the small amount of income Greenpoint was generating at the time, the future was somewhat cloudy.

“Mary and I had invested so much time and energy into our business, and our average commissions were still $100 to $150 a year,” he says. “So, there were clearly moments where I just wondered, ‘Is this thing ever going to play out?’
“But I think it’s like any business. You’re investing your time, money and energy with the hope that one day this thing is going to become a golden goose—green goose, I guess, in this case.”

By the time Colorado voters approved Amendment 64, legalizing recreational marijuana in November 2012, Greenpoint Insurance had already become that green goose.

Thanks to a series of smart marketing moves—helping to found the National Cannabis Industry Association and writing regularly for industry magazine Kush, for starters—Woods was a recognizable face at cannabis industry conferences and a trusted source on marijuana law and insurance in general.

With referrals both from clients and leading law firms, Woods found he didn’t have to expend much effort to drum up business.

By the time the first dispensaries opened for business in January of this year, he was overrun.

“It’s just exploded,” he says. “We’re eight months into legalized pot and we are already at 40% more than what we did last year.”

Much of that growth is from previous medical marijuana clients who are expanding operations to produce and sell recreational products, though new startups still come to Greenpoint every day.

However, given unique client stressors in the cannabis industry, Woods isn’t so sure he’s ready to bring on new blood.

“We’re trying to figure out how to expand appropriately,” he explains. “Client confidentiality is highly charged—theft is among our most frequent claims—and employees know where all the grow locations are, how much product is there. They know everything.”

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