The first insurance coverage for commercial landlords that addresses risks specific to renting to cannabis businesses, has been approved by California Insurance Commissioner Dave Jones. California Mutual Insurance Company is the first insurer in the state approved to add Lessor’s Risk coverage for property owners who are exposed to specific risks resulting from cannabis related business activities of their commercial tenants.
“As Insurance Commissioner, my goal is to make sure all Californians have insurance protection—including the legalized cannabis businesses in California,” said Commissioner Jones. “I want to make sure that when consumers shop in cannabis businesses, when investors and owners invest in cannabis businesses, when vendors sell to cannabis businesses, and when landlords rent to cannabis businesses, there is insurance coverage available to cover everyone from losses. I encourage more insurance companies to follow California Mutual Insurance Company’s lead and file insurance programs to fill the gaps in coverage for the cannabis industry.”
Lessor’s Risk coverage provides liability and property insurance for commercial property owners who lease building space to commercial tenants. Specific commercial activities and businesses addressed by this coverage include cannabis labs, product manufacturing, cultivation and dispensary operations.
Commissioner Jones launched an initiative last year to encourage commercial insurance companies to write insurance to fill coverage gaps for the cannabis industry. As a result of the initiative, the first filing and approval of commercial insurance for the cannabis industry was announced in November of last year and the first surety bond program for the industry was announced in February. The availability of this insurance will reduce barriers to obtaining leased space faced by the cannabis industry.
Last week, Commissioner Jones renewed his call for insurers to offer insurance products for California’s legalized cannabis industry in the wake of published reports that President Trump has abandoned Attorney General Jeff Sessions’ policy on federal law enforcement of cannabis. Jones sent a formal letter to California insurers encouraging them to fill insurance gaps for California’s cannabis businesses. Meetings between commercial insurance executives and cannabis business owners have been convened to educate the insurance industry about the sophistication, professionalism and risk management of the cannabis industry. Jones has also organized tours for insurance executives at cannabis businesses.
In October of last year, he held a first-in-the-nation public hearing to identify insurance gaps faced by the cannabis industry. Cannabis businesses and insurance industry representatives testified about the limited availability of insurance for cannabis businesses. The hearing revealed that while there is insurance available from surplus lines insurers, coverage is limited in scope and, until the approval announced last November, commercial carriers were not yet writing insurance. Jones also announced that department staff would be allocated to expedite cannabis insurance filings.
Source: California Department of Insurance
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