Regulator calls for more insurers to enter marijuana marketPosted On: Aug. 31, 2018 10:40 AM CST
California Insurance Commissioner Dave Jones on Thursday called on more insurers to enter the marijuana market to help fill gaps in coverage for those whose roles are essential in the cultivation and distribution of the drug that is now legal at the state level but remains illegal at the federal.
The announcement came in conjunction with the launch of a workers compensation insurance program created by Atlas General Insurance Services LLC — the latest marijuana insurance product in the state marketplace.
"Cannabis businesses should have insurance coverage available to them just like any other California business," Commissioner Jones said in a statement. "As insurance commissioner, my mission is insurance protection for all Californians, which includes insurance for California's legalized cannabis businesses and its workers. This new program from Atlas is a crucial step in the right direction for this evolving industry. I encourage more insurance companies to offer cannabis business insurance products with the department to meet the needs of this emerging market."
In 2017, Commissioner Jones launched an initiative encouraging admitted commercial insurance companies to write insurance for the marijuana trade after holding a public hearing on the insurance conundrum for businesses.
Experts have said that involvement in the marijuana industry is risky for insurers because the U.S. Food and Drug Administration classifies marijuana as a Schedule I drug, on par with heroin and cocaine, and therefore involvement in the industry is illegal at the federal level — despite that medical marijuana is now legal in more than half of the country. Nine states and the District of Columbia have approved marijuana for recreational use.
Shortly after Commissioner Jones’s initiative, the first filing and approval of an admitted commercial insurer offering insurance for the cannabis industry was announced. In February 2018, the first surety bond program for the industry was introduced and in May the first coverage for commercial landlords for the industry followed. The first standardized cannabis policy forms and program filed by the American Association of Insurance Services was approved in June and earlier this month three more insurers were approved by the commissioner to offer surety bond coverage for the cannabis industry in California.
Commissioner Jones has organized tours for insurance executives at cannabis businesses and convened meetings between commercial insurance company executives and cannabis business owners to educate the insurance industry about the sophistication, professionalism and risk management of the cannabis industry, according to a statement.