Derek Peterson, the CEO of TerraTech, a publicly traded cannabis company with operations in California and Nevada, recently took up what is usually a very boring task: applying for life insurance. However, his application was rejected. On June 13, he received a denial letter from his insurer of choice, Mutual of Omaha, with the following terse explanation:
"We have discontinued the processing of your application for insurance due to company policy. We cannot accept premium[sic] from individuals or entities who are associated with the marijuana industry. We are regulated by agencies of the."
The letter, which Peterson shared with The Stranger, ends without saying which agencies, if any, have regulations prohibiting cannabusiness employees from obtaining life insurance. One can only assume they are speaking about the federal government, which actually doesn't have direct regulatory influence over the insurance industry. The federal government can preempt state regulations it deems to be insufficient, but the nuts and bolts regulation of the insurance industry falls to individual states. And, as Peterson told me, TerraTech is in compliance with all applicable state regulations.
"We're a publicly traded company," he said. "Most of our activities are extremely overt in nature." Peterson said he's since tried to get more information on the reasons for the denial, but received none.
"They won't comment or give any additional information except, 'this is the decision we've made,'" he said. "We're certainly used to that on the banking side to some degree." Mutual of Omaha did not respond to a request for comment from The Stranger.
While cannabis users have been denied health and life insurance in the past, and can face higher rates similar to those applied to cigarette smokers even if they are approved, Peterson says this wasn't about usage.
"It's really drafted in a manner that seems to be about my broader association with the industry," he said. "This looks like a flagpole that was planted. This is one of those hangovers we have, and to me it comes from that Reagan era: 'This is your brain on drugs.'"
The cannabis industry is used to being denied basic services. In the case of banking, the industry has been able to adapt—beefing up security, paying taxes in cash, paying penalties for paying taxes in cash in cash, and various other logistical workarounds. But on life insurance, the industry has no recourse. And it's actually a big deal, said Peterson.
"There's really no mechanism for us to deal with lack of insurance," Peterson said. "Not having something as significant as that could have a very profound effect on someone's life or business." Indeed, Peterson was hoping to get not just personal life insurance, which is important for obvious reasons—he's a family man—but also "key man" insurance for his company. Key man insurance provides the company with a payout in the event of the loss of one of its vital executives, enabling it to continue operations. It is a basic functional component of any business.
"Mark Zuckerberg has definitely got key man insurance," said Peterson. But Peterson doesn't and, to him, it's just another example of unfair discrimination against the cannabis industry.
"We've got banking issues, 280E issues, and apparently now benefit difficulties," lamented Peterson. "It's archaic at best, and certainly frustrating."
In the meantime, he joked, "I'm just walking around trying not to get hit by a car."