CA Cannabis Company Receives Largest Insurance Award in History
A California cannabis company recently received a $1 million insurance payout, believed to be the largest insurance payment to ever be awarded in the legal cannabis industry. The unnamed insurance company, based in Great Britain, made the payment for crop damages sustained by huge wildfires that engulfed parts of California in December and January.
Many in the industry see this insurance award as yet another sign that mainstream corporate America’s view on legal marijuana is rapidly evolving. The thought of any sort of comparable = insurance payout to a cannabis cultivator would have been laughable even just a couple years ago.
A person involved in the drafting of the insurance policy told The Cannabist that they modeled it closely after other agricultural businesses. But in this instance, they paid extra attention to some of the risks specifically associated with cannabis, including atmospheric change and contaminants entering the greenhouse.
This close attention to detail came in handy when the fires came and ash began falling from the sky. The ash from the wildfires seeped into the greenhouse and ultimately contaminated the entire crop, leading to the $1 million payout.
But the insurance award didn’t come for free; the coverage was expensive, with a $30,000 premium and $25,000 deductible. The insurance company has since said that this payout was so large and expensive for them, that it could cause them to limit their involvement with the legal cannabis industry in the future.
Does this signal a positive shift in corporate attitudes toward cannabis? Was this a fluke that will ultimately lead insurance companies to shy away from marijuana companies? All of that remains to be seen, but one thing is clear: it is of utmost importance to take every step possible to protect your legal cannabis business.
Contact us at Gleam Law if you need help drafting contracts or leases, filing for federal and state trademarks, or successfully patenting a design for your cannabis business.