Post on 12-Sep-2018
Cannabis InsuranceRed State, Blue State…..Green State!
PRESENTED BY:
Robin WestcottVice President,
General CounselAAIS
PRESENTED BY:
Fred KarlinskyShareholder,
Greenberg Traurig
2 © 2018 by American Association of Insurance Services. All rights reserved
Cannabis Questions
The topic of cannabis insurance raises many questions...1. What is Cannabis?2. What are the numbers? Will Cannabis be a profitable
business?3. Is cannabis insurable? 4. Are there legal risks to insuring cannabis items and activities?5. What happens if the federal government… ?6. Are there unique risks and heightened exposures for
cannabis businesses?
Cannabis Basics
• Main psychoactive compound is THC (Tetrahydrocannabinol)
• CBD (cannabidiol) driving current research
• Terpenes• Entourage Effect
4 © 2018 by American Association of Insurance Services. All rights reserved
The Cannabis Climate
64% Approval (Gallup Poll, October 2017) $10 billion in U.S. sales (2017)
− 33% increase from 2016− $20 billion by 2021
$100 million monthly revenue in Colorado 10,000 licensees 20,000 - 30,000 cannabis businesses 165,000 to 230,000 full and part-time employees
5 © 2018 by American Association of Insurance Services. All rights reserved
Legalization 2018-19
Medical Utah; Oklahoma;Missouri; &Kentucky
Adult-Use Illinois;Michigan;Ohio;New York;New Jersey;Delaware;Connecticut;Rhode Island
6 © 2018 by American Association of Insurance Services. All rights reserved
The Federal Climate
Controlled Substances Act (CSA) – Schedule 1− Reserved for drugs that have "no currently accepted medical
use"− Ban on sale, cultivation, and use of cannabis
Limited FDS approval for research programs Industrial hemp also illegal
−Agricultural Act of 2014− 2018 Farm Bill to legalize industrial hemp
− Recently passed Senate
7 © 2018 by American Association of Insurance Services. All rights reserved
The Federal Climate
SCOTUS: Federal government may regulate & criminalize cannabis Obama-Administration: Cole Memo
− Repealed by AG Jeff Sessions Rohrabacher-Farr Amendment
− Protects medical cannabis activities − Introduced in 2001− Prohibits DOJ from spending funds to interfere with
implementation of state medical cannabis laws−Does not change legal status of cannabis−Must be renewed each fiscal year
8 © 2018 by American Association of Insurance Services. All rights reserved
Federal Hurdles for Cannabis Insurance
Need for Cannabis Insurance growing with industry, but. . . − Federal v. State status limits cannabis insurance growth− Insureds left with fragmented, restrictive coverage
Cannabis Related Businesses (CRBs) – High risk business− Theft: Mostly cash business due to banking restrictions−General Liability: Agricultural & manufacturing risks − Products Liability: Edibles & cannabis-infused products
Risks commonly covered by general liability plans for non-CRBs Cannabis consumers: legality issues and coverage deficiencies
9 © 2018 by American Association of Insurance Services. All rights reserved
End of Prohibition!
How likely? How soon?What could federal
legalization look like?What could it mean for
the cannabis industry? The insurance industry?
Image by Luke Eastman ©2018 Champlain Valley Dispensary, Inc
10 © 2018 by American Association of Insurance Services. All rights reserved
Contact Information
Robin WestcottVice President, General Counsel
AAISrobinw@aaisonline.com
Fred KarlinskyShareholder,
Co-Chair, Insurance Regulatory &Transactions Practice Group
Greenberg Traurigkarlinskyf@gtlaw.com