Much like how big banks have kept their distance from cannabis, large insurance carriers have generally stayed away from the industry even as states across the US continue to launch legal, regulated markets for patients and consumers.
California Insurance Commissioner Dave Jones wants to change that.
Jones, a former state lawmaker and Sacramento City Council member, will be holding a series of meetings aimed at educating major insurers and convincing them to begin insuring the industry.
“I’m a big believer in competition,” Jones told the Cannifornian. “Through competition we get better pricing, better quality and more choice in products.”
Generally speaking, cannabis businesses that do have insurance have been getting so-called surplus line insurance, meant to cover risks that are too high for a traditional insurance company to take on. Surplus line policies almost always tend to be more expensive and have stricter requirements than licenses carriers in most cases.
California’s attempt could begin to entice major insurers into the cannabis market, which would likely open doors to a wider variety of policy options in other legal states. Ideally that would mean better coverage and lower costs.
Hammering out the insurance issue is increasingly important as California moves toward issuing state licenses for medical and adult-use businesses. Under draft regulations put forward by the state’s Bureau of Marijuana Control, distributors would be required to meet certain coverage requirements. And ultimately the state wants all cannabis businesses to carry at least $1 million of liability insurance.
The public has until June 12 to comment on regulations involving insurance mandates for cultivation, manufacturing, transportation, distribution, and retail.