The marijuana industry’s seedy past and current illegality at the federal level have made most insurance companies apprehensive to provide policies to the emerging industry. The resultant landscape has left fast-growing cannabis businesses with very limited options.
Slowly but surely, however, things are beginning to look up. Insurance providers are now starting to approach the cannabis industry, albeit with caution, offering a range of insurance options targeted at growers, processors, doctors, dispensaries and testing labs.
High perceived level of risk
Insurance carriers have been closely examining the industry during its fledgling years, and expressed willingness to provide a diverse range of property and casualty coverages to marijuana businesses. Associated risk factors include theft, as with most business that deal in cash, as well as neighbor complaints and the potential of pollution with growers and processors.
Marijuana insurance premiums likely to decline
Insurance premiums are admittedly higher than in non-cannabis businesses. This is largely due to the low level of competition and the high perceived risk. It is likely that, over time, such high premiums will move towards a lower equilibrium. Having watched others successfully and responsibly provide insurance to cannabis businesses, more big-name players are entering the industry. This ongoing increase in competition is likely to drive prices down.
Lack of available data
Another factor contributing to the current high premium on marijuana insurance policies is the lack of available data. Dealing with such a young industry, insurance carriers have yet to develop a comprehensive understanding of the risks involved. Once insurers are able to accurately assess the actual risks associated with legal marijuana, premiums are likely to decline.
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