California’s legalization of recreational marijuana at the start of this year has led to more interest among business owners in the market around getting insurance, according to an expert operating in this space.
“California, for us, has always been an important state, but – we’re usually lagging behind in other states – now California probably accounts for more than a third of monthly submissions that we get,” said Patrick McManamon, founder and CEO of Cannasure Insurance Services, though he added that there’s still a lot of underinsurance going on and it will take a few years to see how the market develops and matures.
There has also been a knock-on effect on the types of cannabis companies entering the market.
“When you look across to some of the other states, we’re seeing much larger businesses in some of these new Midwestern and Eastern states right out of the gate, as opposed to in the beginning when you saw the business start and then grow,” said McManamon.
The insurance offerings nonetheless still have gaps in coverage. “I think it’s grown rapidly in probably the last two years or so, much more so than it was in 2007 when we started,” explained McManamon. “We’re seeing a few more markets come into play, but they’re still picking and choosing. They’re not offering total comprehensive coverage all across the board.
“You can have some that will not provide any coverage for vape pens or even potentially the effects of marijuana from a product liability standpoint,” continued the CEO. “Others are going to have some potential exclusions related to pesticides or fertilizer or any other type of issue like that, so you just have to really look at each one and examine each one carefully.”
While California has been open to insurers finding solutions for the cannabis industry, it hasn’t always been smooth sailing across the board. Even Cannasure, for example, recently ran into a roadblock.
“We just got non-renewed for our E&O insurance because of the operations of the industry that we’re in, so that was a new, interesting one for me,” said McManamon, highlighting a few key qualities that insurance professionals need to have when entering this space, based on his own experiences.
“Perseverance and patience. It takes a long time – it’s still obviously very, very early – a lot of education [because] the market is changing, the products are new. It seems on a daily or weekly basis, you have a new product,” he told Insurance Business. “Roll up your sleeves and understand this market because it is moving so fast and it’s dynamic.”