The Cannabis Business Entrepreneur: Is Your Weed Covered?

With an eye to stay on top of trends and towards emerging industries. Many insurance carriers see a business opportunity in protecting the assets of medical and legal marijuana growers and dispensaries in California and elsewhere.

The cannabis industry will continue to see explosive growth and is expected to grow to nearly $15 billion over the next four years.

Standard insurers are prepared to adopt policies that spell out property and casualty coverages for legal and medical marijuana entrepreneurs, particularly now that they have seen others dip their toe in the market with success.

In states where manufacture, sale and use is legal for recreational purposes, legalization will have a profound impact on commercial coverage, workers’ comp, product and cyber liability, healthcare insurance and more.

Currently, 27 states have either decriminalized or legalized marijuana use in some form. Four states: Alaska, Colorado, Oregon and Washington, and the District of Columbia allow recreational use. In addition, recreational marijuana initiatives are expected to appear on 2016 ballots in Arizona, California, Maine, Massachusetts and Nevada.

According to a recent Gallop poll, 51% of Americans now support full legalization. In 2014, Oregonians voted to legalize marijuana by a 56 to 44% margin. More Oregonians voted to legalize cannabis than voted to retain their incumbent Democratic governor or senator in the same election.

Is this REALLY legal? Technically, it isn’t.

The federal government has greeted legalization by the states with benevolent indifference. The Controlled Substance Act categorizes marijuana as contraband for any purpose, including medical use, designating it a Schedule 1 drug along with heroin and LSD. The manufacture, distribution, or possession of marijuana remains a federal crime for which, if prosecuted, state legalization laws cannot be used as a defense.

So the question is, could an insurance carrier claim federal law over state law? And deny a claim based on cannabis as one of the losses.

The accepted rationale for denying claims for loss of marijuana includes:

1. it is illegal under federal law
2. a contract for an illegal item is unenforceable
3. there can be no insurable interest in an illegal item

A federal judge in Colorado recently ruled that a commercial property and general liability policy issued to a medical marijuana dispensary and its cultivation facility can provide coverage for harvested marijuana that is damaged or destroyed. In the case of The Green Earth Wellness Center, LLC v. Atain Specialty Insurance Company, smoke and ash from a wildfire entered the facility’s ventilation system and damaged Green Earth’s potted pot plants to the tune of $200,000, with an additional $40,000 in damage to plants that had already been harvested and were being prepared for sale.

The policy covered Green Earth’s “Stock,” but excluded “Contraband” and “growing crops.” The court held that the potted plants were “growing crops,” so no coverage was available for their loss would be contrary to law and public policy because their cultivation is prohibited by federal law.

The policy, however, was governed by the law of the state in which the suit is brought. Thus, Colorado’s state law – which does not prohibit the cultivation of medicinal marijuana – applied. Noting the “nominal federal prohibition against possession of marijuana,” the court held that the term “Contraband” was rendered ambiguous “by the difference between the federal government’s de jure and de facto public policies regarding state-regulated medical marijuana.”

The court also rejected the insurer’s argument that coverage would be against public policy, declining to follow a 2012 decision from another district court which held that enforcing the terms of an insurance policy to cover damage to marijuana plants would be contrary to federal law and public policy. Thus, Green Earth’s claim for the $40,000 in damage to the harvested plants is headed for trial. It remains to be seen whether the ruling will be appealed.

Any Insurable Interest?

Without exception any business in any sector involves some sort of risk, and sometimes that risk can exceed the benefits of the business. Insurance is a way of managing risk. You pay a little money and in the event of a claim you get deeper pockets to foot the bill for legal fees and claim payouts.

Every business needs insurance. Landlord and lenders require insurance coverage. So do vendors. And if your business deals with the public, like every medical or recreational marijuana business does, you leave yourself open to claims and lawsuits for a variety of things from slip and fall to product and cyber liability. Insurance is a must if you plan on staying in business for very long.

Cannabis liability insurance isn’t really all that different from liability insurance in other industries. The important things to know are:

1. Liability insurance isn’t unlimited coverage. You will need help selecting liability limits and you can pay for higher limits if you so desire. If you have a big claim, once the policy limit is exhausted, the insurance company is out. That’s where umbrella policies come in.

2. A liability insurance policy will cover slips and falls or property damage but not financial obligations like monetary contractual obligations. There are bonds for that type of coverage.

3. Liability insurance policies don’t cover everything. You see words like “comprehensive commercial general liability” or just “general liability” and you think that’s all you need. Unfortunately, if you are doing something with your business that your insurance company doesn’t know about then there probably isn’t going to be coverage for it.

Recently, Lloyd’s of London ended insurance for the cannabis industry until it becomes legal at the federal level.

How is that impacting companies today and how might it impact them in the future?

Lloyds pulling out of the market has definitely shaken things up, but there is still coverage available.

It expected as more policies are nonrenewed that insurance premiums will go up.

The other insurance companies still writing cannabis coverage are facing less competition and they have less capacity for these policies, so the bottom line will increase. That also means underwriters are going to become more stringent as they quote new policies, so marijuana businesses will need to understand the underwriting requirements to keep their coverage at a reasonable cost.

New insurance companies are entering the marketplace looking for business, so cannabis entrepreneurs should look for companies coming in with rock bottom rates.

I can help you find the right coverage plan for your cannabis business. If you had to face a lawsuit, it could get expensive and you don’t want to fight that alone. Give me a call 858-216-4144 or email me a question at freddie@torinsurance.com.

World Sleep Day 2016: Tips For Getting The Most Restful Sleep

Today is World Sleep Day, an international event held every year by the World Association of Sleep Medicine. World Sleep Day began in 2008 and celebrates sleep, one of the most important things people can do for their bodies.

The slogan for last years event was “When sleep is sound, health and happiness abound.” However, recent surveys say that more than 100 million people around the world aren’t getting enough sleep. The Centers for Disease Control and Prevention says that a lack of sleep can lead to depression, premature aging and weight gain. The CDC suggests a number of ways to improve sleep.

Stop Drinking Caffeine Past 4 P.M.

If you’re caffeine-sensitive, don’t drink any coffee, tea or other caffeinated beverages past 4 p.m. Avoid the stimulant at all costs, and switch instead to caffeine-free drinks, juice or water.

Don’t Exercise Past 8 P.M.

Working out is great, but it can give you a rush of energy that may prevent you from falling asleep later. Try to work out in the morning, or right after work.

Take A Supplement

Magnesium and melatonin supplements may help you get more restful sleep. Take them an hour or two before bedtime.

Turn Off All Electronic Devices

Instead of spending the last hour before you fall asleep browsing Facebook or Twitter, take some time to do some light reading. Computers, televisions and smartphones stimulate your senses too much, making it more difficult to fall asleep later.

Don’t Sleep In On The Weekends

It may be tempting to stay in bed until noon on Saturdays, but that may disrupt your sleep for the rest of the week. Keeping a regular sleep schedule will allow your brain to get used to normal sleep and waking times, leading to more peaceful sleep.

Make the most of each day by being well rested and alert. The brain needs sleep to process information and should be a top list priority in your quest to take care of your body. Be sure to reserve time for sleep.

 

Autonomous Cars: Let The Robot Drive

One of the key forces for change in the 20th century was the automobile. Since the invention of the modern car in 1886 by Karl Benz, it’s been bringing pleasure to millions of individuals around the world.

For nearly 130 years, the automotive industry has been a instrument for innovation and economic growth. Now, in the 21st century, the pace of innovation is speeding up and the automotive sector is facing a new kind of technological revolution as it approaches “fully autonomous vehicles”.

Self-driving vehicles may transform the experience of passengers. How will this technology change the relationship between people and their automobiles? How will self-driving vehicles change the transportation sector and our freedom of mobility as we know it today? How will it impact the personal auto insurance industry? If autonomous cars succeed, how will they change our world?

Back when I was a kid self-driving cars were the fantasy of science fiction writers.

The pages were filled with illustrations depicting what the author believed would be in our driveways 30 and 40 years in the future. But that time has arrived so where are the Flying cars?

I assume we were all guilty of over estimating the rate of progress and assuming by now we would have permanent bases on both the moon and mars.

While George Jetson’s ride is still a long way off, Self-driving cars have taken a major step forward.

Google has been working on building a successful autonomous car, and to-date has several custom-equipped cars, that they claim, combined, have traveled more than 200,000 miles on public roads without crashing. Or to be more accurate, without a crash they claim full responsibility is their cars fault.

The system is based on using a GPS navigation system linked to Google maps in order for the car to “Know” where it is, and of course, where it’s going. Clearly that information alone would be insufficient, these autonomous cars must also be able to tell if the light is green or red as well as be able to detect obstacles in its path.

As a father of a two, it’s hard to believe in the future I won’t have to teach my children how to drive a car.

I am keenly aware of just how difficult it can be to drive and safely reach your destination. The auto in front of you can stop suddenly, children run into the street, cars cut over multiple lanes, some drivers run red lights; if fact the list of possible causes of accidents is long and complex.

Potential advantages of having cars drive themselves, is a matter of opinion. Google states that their cars are safer than if a human driver were behind the wheel, since the majority of car accidents are caused by human error and computers controlled operating systems have vastly quicker reaction times. Roadways filled with these cars all controlled by computers, and importantly, by computers in commutation with the computers in the cars around them, can avoid traffic jams, or even drop us off at lets say a concert, and return when it’s time to go home.

So will you be traveling in a computer driven cars next year? No, don’t expect steering wheels to disappear that quickly. Testing of driverless cars is new, and the first models can hit the road by 2020.

So if the basic technology is here now, why are we still between 5 and 10 or more years away from having them fill our roads? A short answer is regulation. California, is the first state to roll out a series of regulations for self-driving cars.

Google says the new rules might limit the potential for self-driving cars before they even get on the road.

“Safety is our highest priority and primary motivator as we do this,” the company said in a statement. “We’re gravely disappointed that California is already writing a ceiling on the potential for fully self-driving cars to help all of us who live here.”

Will you still need Personal Auto Insurance if your car drives itself?

The answer is Yes. Your new car can be stolen, vandalized, hit with hail or any number of other hazards that will make insurance necessary.

In fact it is concerns over liability that have, and will continue to slow the production of autonomous cars. When accidents do occur, and an injured party visits a lawyer, just imagine the smile that will come to the attorney’s face when they realize they can go after Google (Talk about “Deep pockets”).

Even after self-driving cars arrive, they will share the roads with traditional cars, accidents will happen. Automatic transmissions have been common for more than 60 years, yet still many sports cars are purchased with stick-shifts because they are more fun to drive. Many people truly love to drive and have no intention of letting the car drive for them; so expect autos that have the ability to be switched between auto and Manuel mode.

Sure, one day it will be common to see cars cruising along without drivers, and at some point the George Jetson’s ride will prove true and we’ll all be flying our cars to work.

Workers comp insurance – who needs it and what’s covered?

In the early 20th century, prior to the implementation of workers compensation laws, an injured employee’s only option was to bring a lawsuit against their employer in hopes of receiving monetary compensation for injuries or illnesses. This process could be lengthy and difficult, and often left both parties facing financial hardship.

Today, workers compensation is required by law in most states. When an employee is injured or falls ill in the course of their work, workers compensation insurance can provide monetary compensation for medical care, rehabilitation and lost wages, as well as provide death benefits to family members.

In most cases, in exchange for this compensation, the employee gives up their right to file a lawsuit against their employer, or to have a lawsuit filed on their behalf. However, in certain circumstances, employees can file a lawsuit against their employer. Part B of the workers compensation policy, called Employers Liability, provides coverage in cases like this.

The federal government has a workers compensation program for federal employees, but each state has its own laws and regulations for state employees and for businesses that are owned or operated within the state. Without workers compensation insurance, an employer is exposed to the potential of paying these benefits to the employee out of pocket and facing fees from the state for not following local laws.

Why Do I Need Workers Comp Insurance?

One of the most important parts of running a business is keeping your employees safe. While there are many ways to minimize the likelihood of injuries and provide a safe work environment for your employees, accidents do happen. Medical bills and rehabilitation can be costly, and just one accident or negligent act can cost your business everything.

Some states require workers compensation insurance. In order to follow all local laws and regulations. For instance California law requires workers compensation insurance in every work situation.

What’s Covered in a Workers Compensation Policy?

If you own a California-based business workers compensation is critically important. For example, when it comes to the construction industry because of the physical risk inherent in the profession. You (or your employees) are lifting things. There may be strain on the muscles and ligaments. There could be an accident. You know you need it and it’s required by law. But what’s covered in a workers compensation policy?

Workers compensation is an insurance policy that helps to protect your assets in the event that one of your employees is hurt on the job.

When your employee is injured on the job, the policy provides them with financial support to cover medical expenses and lost wages.

Medical coverage + wage replacement = “indemnity”

Only injuries that arise out of and in the normal course of business are reimbursed. Medical coverage may include physician visits, prescription medications, surgeries, etc. The amount to cover lost wages is based on the employee’s weekly wage as determined by California law.

What’s not covered?

The key to workers compensation is that the injury must be work related. If an employee gets hurt offsite on their lunch break, that typically doesn’t fall under their coverage. If you are commuting to your regular workplace, an injury is likely not covered but if you’re traveling to another job site during work hours, then it usually would be. Employees may also be denied coverage for self-inflicted injuries or if the employee was committing a crime.

Protect yourself from unexpected financial burdens by setting up your business with workers comp insurance. If you’re interested in getting a quote on a policy or if you have any lingering questions about what is or is not covered, schedule a call with me.