Prop 64 Prompts Deeper Cannabis Conversation for California Insurance Market

As California Insurance Commissioner Dave Jones noted during a recent panel discussion on the state of the cannabis industry, The Office of the Insurance Commissioner serves the people—and the people have spoken.

When California voters passed Proposition 64, “The Adult use of Marijuana Act,” toward the end of 2016, the conversation for employers and business owners, cannabis-focused or not, moved from “what if?” to “what now?”

It’s a question that drove most of the discussion during The Cannabis Law, Accounting and Business (cLAB) panel in Los Angeles. The evening event brought together leaders from the local insurance, legal and cannabis business communities, including Jones, Nextwave CEO Jeff Ward, Wilson Elser Partner Ian A. Stewart, SIVA CEO Avis Bulbulyan and myself, to discuss the future of this ever-evolving cross section.

California is the fourth largest insurance market in the world, and cannabis has grown into an economic trailblazer across the state.

Just recently, The California Cannabis Manufacturers Association announced a landmark collaboration with the United Food and Commercial Workers Western States Council in an effort to build a sustainable industry that generates jobs, provides entrepreneurial opportunity and protects consumers and workers.

In fact, California is on the verge of developing a legal market for marijuana estimated to be worth more than $5 billion, according to a state-sponsored economic study.

However, the promising fiscal projection does little to provide clarity for cannabis companies looking for proper coverage, nor does it answer drug policy questions and concerns that non-cannabis employees may be facing—which is another conversation in itself.

As Mike Kelly, founder of cannabis oil producer Speakeasy710, revealed during the panel, insurance coverage can be perceived as self-incrimination by some business owners.

There is also growing concern regarding the risk of pesticide lawsuits, potential illnesses, untested claims and a myriad of other legal challenges facing the market.

Even with these sticking points, the prevailing theme of the night was that the legalized cannabis industry is here, it’s growing rapidly and there are going to be many businesses in the not-too-distant future that will need to have access to proper coverage.

As with any innovative industry, there’s always a learning curve, especially from an insurance and risk management perspective.

After meeting with dozens of entities in this space, it is becoming increasingly clear that many insurance policies are either written incorrectly or fail to properly classify these businesses—an oversight that can have disastrous results.

The truth is, most cannabis business operations are complex, have many organizational components and need special attention to ensure that all assets are properly protected.

Whether they need product liability, general liability, Workers’ Compensation or a range of other coverages, the rapid evolution of this space means insurance agents are going to need to be diligent and proactive—as will the business owners.

There are a lot of complexities with this topic, let’s continue the conversation at


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About Corey Tobin

With close to a decade of industry experience, Corey has worked with a number of small and medium-sized businesses and is knowledgeable about property and casualty, life and health insurance. Corey specializes in working with elevator contractors, manufacturing, distributing, healthcare and construction. Additionally, he is focused on the unique needs and challenges facing cannabis related business, including dispensaries, cultivators, extractors, developers and much more.

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