Your cannabis business insurance should leave no surprises

By Max Meade, for Elevated Nation

Imagine you operate a dispensary, and for the past 3 years things couldn’t have run more smoothly. You have a steady stream of clients, you haven’t suffered any losses and you’re beginning to build a solid reputation around the area. Things could not be going better.

Next thing that you know, you get a call from your insurance agent saying that you’ve just been cancelled and have to get new insurance.

You’re shocked. You think to yourself “How can this be? I haven’t submitted a claim, what reason do they have for cancelling me?”

The scenario above is a true story and one that happened to my client Michael Thomas, owner of High Tides Dispensary in Gualala, California, who was cancelled by his insurance carrier in June.  Why was he cancelled after being with them for 3+ years with no losses or claims?

Because his former agent placed him with a company that does not work with the cannabis industry. The reason that he was insured with that company was because his former agent classified his business as a “Gift Shop” not as a “Dispensary.” However, once the carrier found out what he was really doing they cancelled him right on the spot, leaving him with no coverage and having to scramble to find and implement the proper insurance.

This was all unknown to Michael, who assumed that his agent classified him correctly and didn’t misrepresent what he actually did because he knew that his agent was aware he was a dispensary.

The agent didn’t act maliciously, but should have been up front and said that they either didn’t truly understand the Industry/his business or that they couldn’t access the markets that were needed. Instead, they put Michael in a vulnerable position of not having insurance in place during the time that it took us to properly implement the correct coverage.

What happened to Michael wasn’t the first time that this has happened to a business and it won’t be the last as there are agents out there who are more concerned with writing business than making sure that what they are insuring is correct. Compound this issue with the fact that there are only a handful of specialty insurance markets who entertain the cannabis industry, what happened to Michael is likely to happen to other cannabis businesses.

This only stresses the importance of working with someone who acts as more than just your insurance agent, who you hear from maybe once a year and then around renewal time. You want someone who acts as an advisor that can work with you to ensure that your business, employees, equipment, inventory, etc. are all properly insured so that you, as the business owner, can rest easy at night knowing that your business is protected.

After hearing about what happened to Michael and High Tides, how confident are you that your business is insured correctly? Feel free to reach out as I’m more than happy to review your current insurance program to see if it is indeed set up correctly to protect your business or if you should be expecting a call from your insurance carrier soon.

Max Meade is an insurance advisor with Brown & Brown who specializes in assisting cannabis ventures across the United States. Seeing cannabis help a close family friend inspired Max to want to help cannabis ventures and patients. He may be reached at MMeade@bbdvins.com or 856-552-6358.

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