Cannabis Industry And Insurance: California’s Next Trend

Various forms of protections are now available to cannabis businesses

The cannabis industry has garnered a lot of hype. But the plant’s federal illegality hinders it from functioning as a legitimate line of business. The most common example of this is the lack of financial assistance (read: banking) available to the industry. Another crucial service withheld from cannabis businesses is insurance. Dave Jones, California’s Insurance Commissioner, has aimed to change that since the beginning of 2017. After a year-and-a-half of encouraging insurers to write insurance for the legal cannabis industry, various forms of protections are now available to cannabis businesses.

On June 4, Commissioner Jones announced the approval of the first Cannabis Business Owners Policy (CannaBOP) in California. Crafted by the American Association of Insurance Services, the CannaBOP program is a package consisting of property and liability coverage for dispensaries, processors, manufacturers, distributors, cannabis storage facilities and other relative businesses operating in the state. As of now– even with the new program in place– the majority of cannabis businesses have no choice but to absorb the cost when something goes awry, which can mean losing millions of dollars. No other legalized businesses or industries face that kind of financial risk.

“My objective is anytime a consumer walks into a cannabis retail facility or a vendor enters into a contract or delivers goods to a cannabis business, or any time someone invests in or operates a cannabis business, insurance is in place to cover risks,” Commissioner Jones said in a phone interview, “just as there is in any other form of business in California.”


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