Despite what you might hear about cannabis culture and the negative stigma that still clouds this blossoming industry, professionals and entrepreneurs working in this space are just like those in any other sector as they try to break new ground and develop innovative solutions to meet market demand.
That was one of the messages that Will Stewart, VP of corporate communications and public affairs for recreational and medical cannabis company Hiku and chairperson for the Insurance Business Cannabis Cover Masterclass, voiced during his opening remarks at the event, which was held in Toronto on November 28.
The Masterclass brought together insurance leaders to discuss key insights about regulation, cannabis-specific risks, business growth in this sector, and the state of the current insurance market as well as how it will develop into the future. With marijuana’s potential to disrupt a multitude of sectors, insurance professionals should keep a close eye on developments in this space as the effects of legalization permeate.
“Cannabis is certainly a disruptor, just like Uber has disrupted the taxi industry, Airbnb has disrupted the vacation rental and business travel world, just like the newspapers are being disrupted by the internet and bloggers, [and] just like HMV and others are disrupted by digital music,” said Stewart. “Cannabis will disrupt the alcohol and beverage industry, and cannabis is already disrupting the pharmaceutical industry,” as well as cosmetics and more broadly, the health and wellness space.
There’s a lot still to learn, however, even though Canada is a leader among the G7 countries to legalize recreational cannabis. The sheer number of CBD products already available on the market in certain US states is one example that reveals how far the cannabis market in Canada still has to go, which is why learning from experts – like those taking part in the Cannabis Cover panel discussions that examined cannabis case law, the changing face of medical and recreational marijuana at work, and the insurance implications of legalization, among other topics – is crucial right now.
“I think this is going to be a big economic shift in our country and certainly the biggest one we’ll see in our lifetime,” said Barinder Rasode, president and CEO of NICHE Canada during a panel on marijuana insurance regulation in a post-legalization world. Jacob (Jamie) Dressler, her co-panelist and senior analyst on cannabis legalization and regulation for Health Canada added: “Every day, we get a call from an industry that I wouldn’t have expected to call us and they’re asking how do we get involved in this,” underscoring the reach of the cannabis industry and the businesses it could touch in the near future – something that insurance professionals should be aware of, especially as another segment of the recreational marijuana industry is poised to take off soon.
“One of the calls that we field the most are actually chefs and candy producers who are wanting to get into the high end edible market,” said Rasode, though Dressler admitted there are still gaps in the current legislation around edibles.
“It is in Cannabis Act that we have committed to develop regulations for edibles a year after coming into force, or up to a year,” he explained. “Right now, we are drafting the regulations behind edibles, so you will start to see some innovations behind that,” as well as future consultations with stakeholders as Health Canada continues its work in this area.
As for the risks facing cannabis businesses that their insurers should know, data breaches are key, particularly for licensed businesses selling cannabis to medical patients and who store large amounts of patient information.
“There are real privacy risks associated with patient data being released, so cyber coverage is going to be particularly important,” said Alexis Levine, partner at Blake, Cassels & Graydon LLP during the panel on complex commercial exposures and specialized coverage, though there are some issues with finding this coverage for cannabis businesses.
“Cyber policies are typically not expensive unless you’re in the cannabis space,” said Lars Rittmann, broker at Erb and Erb Insurance Brokers, during the panel. “They’re 10 to 20% more just because of the industry it’s in – there’s no actuarial data that a lot of these underwriters and the people who set prices are working from.”
His tip for other brokers is to keep lines of communication open with underwriters when working with cannabis clients since not all policies are created equal and the insurance market for this space is still evolving.
“This product is constantly influx. It’s almost on a weekly basis [that] a different MGA comes out with something else,” he said. “So, that communication with your underwriter and the MGA is critical.”