The following coverages are often included in the Management Liability package.
Directors and Officers (D&O): D&O insurance is a great tool to protect a company in the event of regulatory action. Even though federal enforcement of the Controlled Substance Act cannot be covered because you cannot insure against illegal activities, coverage for state and local enforcement issues is provided.
Ignorance is not bliss! Claims may arise when a company is non-compliant with state regulations, even if a company believed they were strictly adhering to regulations. For example, California recently introduced a legislative bill, AB 1356, which if passed could require cities to permit one dispensary for every four liquor stores. Should a company not adhere to this, they and their officers would be severely fined.
Limited banking options have created unique challenges to companies in the cannabis space. Access to checking accounts is often expensive or hard to come by, which created a cash intensive environment. It’s imperative to keep good records as these are needed for payroll documentation and showing investors and the IRS company profits and expenses.
Lack of traditional funding has created a number of issues and exposures from private lenders or selling shares to fund growth. The largest claims in this instance are for not returning the loan or mismanagement of funds.
In addition, D&O insurance is becoming a requirement to hire experienced executives as this industry grows. These executives want to ensure they have coverage in the event of a claim.
Employment Practices Liability Insurance (EPLI): All companies with employees should consider EPLI coverage. Improper termination and discrimination claims can be costly. Although cannabis companies face the same risks as other companies, retail stores and grow facilities are at a heightened risk for third party claims, due to the nature of the business.
ALLIANT ALTERNATIVE RISK FINANCING/CAPTIVE FORMATION
As with most emerging industries, the availability of insurance coverage and the cost of coverage is an issue for cannabis companies. A captive insurance company could provide a cannabis business the ability to create its own insurance risk financing solution by offering customized coverage, a vehicle to share risk on difficult-to-insure cannabis related exposures and cost savings. We understand the challenges in the current regulatory environment on captive formation, and our team is on the leading edge in working with insurance markets and regulators to find captive solutions.
Our history as a Specialist insurance brokerage has allowed us to strategically support and advise our clients’ business operations regardless of their involvement in the marijuana and hemp industry. We work with various segments of this business including:
• Multi-state operators
• Grow/Cultivation operations
• Manufacturing and processing facilities
• Retail/Medical dispensaries
• Delivery services
• Cannabis lounges
• Ancillary/Support services
Alliant has solutions for your cannabis business. From seed to sale.
At Alliant, we understand the potential risks facing cannabis businesses every day, from seed to sale. We take a long-term, all-inclusive approach to the business, with a focus on understanding every touchpoint, so we can help anticipate what lies ahead. We’re not in the business of selling a product or program. We’re in the business of empowering clients to deliver the highest quality products to the market and drive the outcomes that matter to their business. Our creative solutions are structured specifically for cannabis businesses, leveraging long-term relationships with key industry specific markets to manage the risk, and protect business assets. Call us!
Greg Winter is a Producer with Alliant Insurance Services, Inc. He can be reached at (301) 909-1719 or firstname.lastname@example.org.
Trey Busch is Managing Director at Alliant Insurance Services, Inc. He can be reached at (831) 789-8561 or email@example.com.
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