The cannabis market is one of the fastest growing industries in the US. In 2019, a number of key states like New York, Illinois and New Jersey, are poised to come online with adult-use recreational schemes, possibly hiking the number of legal states up into the mid-teens.
As more states come online and the industry continues to grow, savvy business owners with their eyes on the marijuana prize are seeking out insurance options to protect their assets – and they’re relying on their brokers to translate the myriad of complex rules and regulations that underpin the business.
Max Meade (pictured) is a cannabis insurance adviser for Brown & Brown Metro, LLC, a Brown & Brown company. He has been specializing in cannabis insurance for more than three years and currently has a book of approximately 40 clients throughout the US, ranging from dispensaries and cultivators to consultants and ancillary service providers.
According to Meade, the education and advocacy piece that brokers should be providing around cannabis insurance is sometimes lacking. Too often, brokers are focused on a transactional play where they tell cannabis start-ups: ‘You need this coverage, this coverage and this coverage,’ without explaining why those coverages are needed, said Meade.
“At Brown & Brown, we’re not just going to ping an email to a client and process a quote. We want to help our clients understand their exposures and why they need certain coverages, because a lot of them have never had that help before,” he told Insurance Business. “We’re here to walk our clients through the insurance process and we’ll stick with them the whole way. We will go through the application line by line, question by question, and we will give them explanations they haven’t had before. Helping clients understand the ‘how’ and the ‘why’ is really important.”
For insurance brokers who want to fulfil their promise of advocacy to cannabis clients, it’s important to stay ahead of the curve with regards to new regulation, legal case studies and so on. Meade spends a lot of time attending industry events, connecting with important stakeholders, and learning how all of the different cannabis businesses operate along the supply chain. Brokers in states that have not yet given the go-ahead for adult-use recreational schemes, can also look to and learn from states that are already online.
“Among the states that have an adult-use recreational program, no-one has yet said they wish they didn’t do it, but each state has said they wish they did a few things a bit differently,” said Meade. “The benefit for all these states coming online now is that they can learn from, talk to, and get input from states like California and Colorado. It makes it a bit easier for the new states to roll out their programs because they can take the bits that are working well in other states and build from that. We’re also starting to get valuable data from the states like California and Colorado – real quantitative data that we can use to help our clients.”
At present, marijuana is legal for recreational use in 10 states. The insurance market is relatively small and mainly consists of players in the excess and surplus space. This presents opportunities for brokers – if they do their networking and their homework.
Meade explained: “Right now, because of how limited the space is, we’re able to really get to know the carriers we work with. We have a good idea of what their bread and butter is, and what risks they like to take on. Some are really CBD-heavy whereas others like the plant or crop side of things. As this point, because of the work I’ve done getting to know the markets in the past few years, I know exactly who to go to for what risk.”