| A few years ago, my uncle-in-law filed an insurance claim after a hurricane damaged his Gulf Coast real estate in Florida. After making that claim, wind damage is no longer covered for his beachfront property, he recently told me.
Business and property insurance seems equally as hard to come by in the cannabis industry, where people’s livelihoods often remain unguarded by natural disasters, whether that be wildfires or heat domes in the Pacific Northwest, a 6.4 magnitude earthquake in the Emerald Triangle, a winter storm in Texas, or hurricanes that repeatedly ravage the southeastern U.S. and its territories.
More recently, flooding was the culprit of business setbacks earlier this month in California. Specifically for Los Angeles-based Jungle Boys, a vertically integrated collective of legacy cannabis operators, the weight of rainwater led to a partial roof collapse at its cultivation facility.
“2023 started off with a punch to the stomach but you can’t keep an old dog down. A few days of around the clock work, and we will have this grow back up,” Jungle Boys posted on Instagram with a photo of the roof and video of the flooding. Followers inquired about an insurance claim, but Jungle Boys responded, “Nah, we won’t sit and wait for insurance. We will fix it ourselves and get everyone back to work.”
The severe weather events in California—to which Gov. Gavin Newsom attributed 21 deaths—also led to an emergency declaration from President Joe Biden, who authorized the Federal Emergency Management Agency (FEMA) to coordinate disaster relief efforts. But the governor’s Office of Emergency Services encouraged those impacted to file insurance claims before applying for FEMA assistance.
In the cannabis space, insurance options often are confusing and costly, CBT digital editors Eric Sandy and Melissa Schiller reported in our June 2018 issue, which included a survey of licensed growers who were paying monthly premiums that ranged from $793 to $15,000 at the time.
And much like access to safe banking, the federal government hasn’t provided much clarity. In March 2021, Rep. Nydia Velazquez, D-N.Y., and Sen. Bob Menendez, D-N.J., introduced the Clarifying Law Around Insurance of Marijuana (CLAIM) Act, which aimed to “provide a safe harbor from penalties or other adverse agency action for insurance companies that provide services to cannabis-related legitimate businesses in jurisdictions where such activity is legal.”
But that reform effort, like many others, remains in limbo as politics continue to collide with policy in Washington during a time of economic headwinds—and natural disasters—for cannabis operators who far too often are left making the best of the cards they’re dealt. Many traditional insurance services are absent from the industry.
-Tony Lange, Associate Editor | 