According to a statement from Commissioner Dave Jones, his department approved the first admitted commercial insurance company, Golden Bear Insurance, to cover state-legal marijuana businesses. An admitted insurer is one that is backed by California Insurance Guarantee Association. For years, cannabis companies either went without insurance or had policies with surplus line insurers, which are unregulated, expensive, and not backed by the state.
Golden Bear Insurance, which mostly covers bars and restaurants, is based in Stockton, California, and will be offering cannabis policies only within the state. Golden Bear's cannabis policies are not guaranteed by the federal government.
"This is the first of what I hope will be many commercial carriers filing insurance products to fill insurance coverage gaps for the cannabis industry," said Jones in a statement. "Consumers who visit cannabis businesses, workers who work there, businesses who sell products to or rent property to cannabis businesses, and the investors, owners and operators of cannabis businesses all should have insurance coverage available to help them recover when something goes wrong, just as any other legalized business does."
Earlier this year, Jones launched a public initiative asking commercial insurance companies to write policies to cover what he described as "coverage gaps" in the industry. Jones organized tours for insurance executives to inspect cannabis businesses and to help them understand the industry's unique risks.
Stacy Jackson, Golden Bear's general counsel, says the company will cover only California state-licensed cannabis companies that operate within the state. (In the fragmented, state-regulated cannabis market, it is illegal for companies to ship marijuana products out of state. No companies in the U.S. can sell marijuana products outside of the state they operate in.)
Jackson says the policies will cover cultivators, manufacturers, and retailers. Golden Bear, which was approved on November 1, will offer general liability, products insurance, and property coverage. Jackson says some policies will also cover crime. Details are being finalized, but Jackson says policies will range from $1 to $3 million, with property coverage totaling around $10 million depending on property value.
Hayes Insurance Agency will be the exclusive broker for cannabis insurance.
"As long as you're in compliance for the state, we will cover your business," says Jackson. "Anyone who is trying to do the right thing and follow the rules will be covered."
Bob Hoban, an attorney who runs his own cannabis law firm with clients in 17 U.S. states, says state-guaranteed insurance for California's industry is a big deal for businesses.
"This normalizes cannabis businesses and helps protect the value and safety of businesses in the industry," says Hoban.
Commissioner Jones says he hopes more state-backed insurers apply to cover the industry.
California voters legalized medical marijuana in 1996. Adult-use sales, what is known as "recreational use," will become legal in January 2018.