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First-of-its-kind ‘Cannabis Businessowners Policy’ launched in California on 4-20

Insurance Forums Staff

At the state’s urging, in California there is now an insurance policy designed exclusively for owners of Cannabis industry businesses.

AAIS (American Association of Insurance Services), the only national not-for-profit insurance advisory organization governed by its member companies, announced the filing of the first-of-its-kind Cannabis Businessowners Policy in the state of California, last Friday, April 20, on the unofficial “4-20” cannabis enthusiast annual day of celebration.

By 2020, cannabis businesses in the U.S. are expected to generate more than $20 billion in medical and recreational sales, and over 250,000 jobs. The cannabis industry is expanding rapidly despite numerous obstacles and strict state regulations.

In September 2017, the California Department of Insurance requested that AAIS develop cannabis insurance solutions for the California cannabis market. AAIS responded by expedited development of a state-specific businessowners program (BOP) for the cannabis industry, complete with forms, rules, and rating information.

Like most standard businessowners programs, the AAIS California CannaBOP program provides a package policy containing both property and liability coverage for qualifying California cannabis dispensaries, storage facilities, distributors, processors, manufacturers, and other businesses participating in or supporting the California cannabis industry.

“The burgeoning Cannabis industry represents a tremendous growth opportunity for insurers,” according to John Rich, AAIS Commercial Lines Product Manager. “At AAIS, we believe that it is important for our member carriers to have qualified programs in order to respond quickly to market needs.”

AAIS has also filed a broad interline Cannabis Items and Activities Exclusion with the state of California. The mandatory exclusion endorsement will apply to all commercial lines policies in California, other than CannaBOP, and will be filed on a nationwide basis in order to facilitate expansion of the CannaBOP program beyond California.

According to a late February 2018 article in Marijuana Business Daily, in California, basic insurance for cultivators costs $20,000-$30,000 per year, according to Mike Aberle, head of the insurance section of the California Cannabis Industry Association and senior vice president of Next Wave Insurance Services. Meanwhile, Golden State retailers face policy rates ranging from a few thousand dollars to $200,000 annually.

The CannaBOP program is effective upon approval. For additional information about CannaBOP affiliation and program details, visit http://www2.aaisonline.com/cannabop.

About AAIS: 
Established in 1936, AAIS continues to serve the Property & Casualty insurance industry as the only national nonprofit advisory organization governed by its member insurance carriers. AAIS delivers tailored advisory solutions including best-in-class policy forms, rating information and data management capabilities for commercial lines, inland marine, farm & agriculture and personal lines insurers. Its consultative approach and unrivaled customer service underscore a focused commitment to the success of its members. For more information about AAIS, please visit www.aaisonline.com.



8 thoughts on “First-of-its-kind ‘Cannabis Businessowners Policy’ launched in California on 4-20”

    • Haha, there are independent cannabis focused agencies popping up now. It’s going to transform the insurance industry as well especially with the green wave it’s creating. PEO option seem to look like a valuable alternative as well being as these new companies are growing so darn fast.

  1. It just makes sense, stop holding these extreme revenue generating companies back from helping the economy. For these business owners, if it’s true…like someone mentioned to me…an employee leasing type of model would be perfect for these businesses. Like I said, someone mentioned there are a couple out there. A dispensary owner I was connecting with on Linked In mentioned that he had found coverage through http://www.legacyemployerconcepts.com . If it’s true, it could really open up discussions on how these businesses should be able to operate. The unfortunate part usually is on the employee’s behalf because they have trouble showing income in a cash based business to fulfill applying for loans, etc. Has anyone else heard of these PEO pay as you go options for the industry? This could dramatically help with those large yearly premiums they come across. I know that there are specific independent agencies focusing on Cannabusiness.

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