By Elise Linscott
Next year, Hawaii will join the dozens of other states with functioning medical marijuana dispensaries. For the insurance sector and other affiliated businesses, that means one thing: new business.
In July, Pacific Business News reported that Hawaii’s new medical marijuana dispensaries could generate $30 million in annual sales for the insurance sector. But many brokers are hesitant to dive into this relatively new arena, citing banking restrictions and the fact that marijuana is still federally illegal.
“We’re seeing great growth potential as the cannabis marketplace expands,” said Jeff Ward, chief executive officer of Next Wave Insurance Services, LLC. “We don’t see a lot of competitors simply because it’s an unknown class of business that concerns a lot of markets, including the fact the federal government hasn’t legalized it yet. That creates issues or concerns for a lot of traditional insurance companies that are hesitant to jump into the market.”
Washington D.C. and 23 other states nationwide have legalized medical marijuana. A few others, including Texas, Florida and Utah, have passed restrictive legislation pertaining to medical marijuana, but don’t allow dispensaries yet.
Four states, including Washington, Colorado, Oregon and Alaska, as well as D.C., allow recreational use of marijuana.
Before brokers make the decision to enter the cannabis insurance marketplace, Mike Aberle, senior vice president of Next Wave’s Cannabis Insurance Program, recommends one thing: Do your research. Cannabis insurance, while similar to other types of commercial insurance, has its nuances that agents should study and understand.
“We have a lot of agents signing up with us daily who don’t really know the industry or the business they’re trying to represent, and haven’t taken the time to know what the coverages provide and exclude,” Ward said. That’s a problem, he added, since agents need to be able to articulate those points to the buyer.
