by Daniel Garcia Jr.
To be a successful cannabis insurance professional in the current industry is to be a chameleon. While this could be said for a number of industries, it is especially so in the cannabis industry.
Throughout college during the end of the black-market years, I worked weekends as a ‘trimmer’ removing the large leaves from the buds. This experience gave me an inside look at how the black market cannabis industry worked: what the business challenges were; what job roles consisted of; even a personal understanding of the workplace injury risks. This background has given me insight to the business of cannabis insurance.
About three years ago here in California, as prop 64 was gaining momentum leading up to the 2016 vote, we began to see an influx of interest from the cannabis industry about their business insurance options. This early interest was primarily curiosity, though a small number of operators, mostly dispensaries, did procure insurance packages. However, even as curiosity turned into buying intentions, it was a very cost-driven, as opposed to coverage-driven, conversation and transaction. To this day, one of the most common questions we get from long time cannabis operators -- like those for whom I worked during my college years-- who are finally looking to buy commercial insurance is, “does it really pay out on claims?” This old school cannabis operator is still skeptical of the process. And for many, they have a lack of faith in the insurance product itself, at least initially.
We’re beginning to see a different cannabis client. This new client typically has large investment dollars behind them, potentially even an investing group with a board of directors. That board hired a professional from the corporate world to head up and manage the business. This new ‘suite’ was tasked with a laundry list of business management assignments which include placing appropriate levels of insurance to protect the investment. This individual walks into our office with a very sophisticated understanding of business insurance and likely even the experience of seeing insurance in action through paid claims in their previous corporate role.
The issue we face as insurance advisors is that we work every day with both of these insurance buyers.
At times we are challenged with instilling trust and understanding to a buyer who has gone decades without insurance. With the State now implementing regulations for maintaining certain lines and levels of insurance, this client walks in reluctantly and skeptical of what we can do, and what they should or shouldn’t tell us. Often times this client has the same feelings about insurance as they do about their taxes.
In other instances, we have a client walk in with an extensive list of insurance they are looking to see quotes for. They have specific and sophisticated questions about the language that may be in a given policy, what specialized policies are available to the cannabis industry, and even requests for large excess liability limits.
Regardless of the client, our goal is to build a comprehensive insurance and loss control program. The challenge we face is relating very different motivations from very different individuals back to the need for that comprehensive insurance and loss control program. There are instances every day where a grandfathered cannabis operator is turned off and walks away from doing business with an insurance professional because that broker is using ‘insurance speak’ or presented a comprehensive insurance package without explaining and relating the coverages back to that client’s initial motivation. On the flipside, business has been lost because an agent underestimated a particular client’s understanding of business insurance and failed to articulate the depth of coverage, services, and insurance tools that they could provide.
The solution to this conundrum? Be a chameleon. We need to listen to our prospects and ask the right questions, with an eye to understanding where they fall on the cannabis insurance buyer spectrum. As they open up to us, we must change the color of our conversation to match their motivation. Just as all roads lead back to Rome, all motivations relate back to loss control and the need for insurance solutions. It’s a matter of speaking the same motivation language to show them how such a program will provide immense value to their business, no matter where they are on the cannabis client spectrum.
Daniel Garcia Jr. is a commercial insurance broker heading up VANTREO’s cannabis business insurance division, VanCann Insurance. Based in Northern California, Daniel has been a commercial insurance broker for six years.