Uninsurable? Dispensaries encounter obstacles when obtaining insurance

Despite approval from the government, dealers are struggling to obtain insurance coverage for their small businesses, opening the door for enterprising brokers.

Insurance News

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Marijuana advocates scored a big victory last year with the legalization of medical and recreational cannabis sales, but despite approval from the government, dealers are struggling to obtain insurance coverage for their small businesses.
    
Even though these enterprises are lawful and active in Washington and Colorado, many companies are hesitant to write policies because of the backlash marijuana abusers face in states where the substance has not been legalized yet.
    
“You still have to have a certain tolerance for risk if you’re getting involved in the industry,” Taylor West, deputy director of the non-profit National Cannabis Industry Association, told Businessweek.
    
“Progress has been made, but nothing has been done to change the fundamental fact that this is illegal.”
    
Although marijuana has been approved by voters on the state level, federal policy still regards the drug as an illicit substance.  This presents problems for dispensaries attempting to legitimize their business operations.
    
For insurance companies who will take the risk, however, the opportunities are lucrative.  Colorado alone has net $90 million in revenue from recreational marijuana sales in 2014.
    
“You have no idea how big this is going to get,” said J.B. Woods, president of Greenpoint Insurance Advisors, one of the few insurance companies willing to cover marijuana-driven businesses.
    
This opportunity comes at a cost, however.  According to the Denver Business Journal, marijuana dispensaries typically buy insurance at rates two to 2.5 times higher than those for standard businesses.

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