Legal-pot sellers, like all smart business owners, will need insurance when they open their doors. If someone slips and falls in a cannabis store, gets sick from ganja food, or steals all the weed, the cost to a pot business could be colossal. Not only that, anyone hoping to lease commercial property will almost certainly be required to provide proof of general liability insurance. And if those aren't compelling enough reasons, draft rules issued by the Washington State Liquor Control Board last month require every licensee to carry such coverage.
But insurance giants like GEICO and Progressive aren't exactly clamoring to cover potential claims from pot-brownie overdoses.
Cannabis insurance is a relatively new thing. One of the pioneers is Mike Aberle. While he was working as a broker at Statewide Insurance in California in 2008, another insurance seller sent him a medical marijuana dispensary unable to obtain pot-specific coverage.
"After our research, we decided there was no reason to be quiet about [insuring dispensaries]," he says.
Now the medical marijuana dispensary insurance program that Aberle created insures more than 2,000 pot businesses across the country, including many in Washington State, where the program has also paid insurance claims. "We've seen small thefts of product that we paid out because they followed all the guidelines. There have been some we denied because they didn't. That's why it's important to ask your broker what the requirements are," Aberle says.
The pot insurance pool is backed by Lloyd's of London, a network of syndicates—teams of investors who risk large sums of money in hopes of handsome profits—that underwrite the potential insurance payouts. The program now has 1,300 brokers around the nation who are authorized to sell cannabis insurance. As a rough estimate, Aberle says a pot purveyor expecting $1 million in revenue can expect an annual insurance cost of around $900.
And last week brought another breakthrough to the cannabis insurance industry, Aberle tells me, as Lloyd's began underwriting product liability for cannabis retailers. Before last week, only manufacturers could obtain liability insurance for pot food products. "The retailer has been exposed for so long, and now they actually have coverage for it." Now, Aberle says, "If you sell a brownie, we're there to insure it."