There is quite a bit of uncertainty when dealing with insurance in the cannabis industry, given its very recent entry into a legal status. There are numerous hurdles that must be cleared before companies will start feeling comfortable with the industry in the same way that they feel about other industries. There is a stigma in place as a result of decades of propaganda, and until that is broken, this uncertainty will loom over. However, no line of coverage carries with it more uncertainty than that of life insurance. It is a bit of a counter-intuitive notion, since one might ask, “Why will they allow industries like tobacco to obtain this line of coverage, but not cannabis? Isn’t it safer?”
It is this type of confusion that manifested itself when Derek Peterson, of Terra Tech in Irvine California, had his application for life insurance from Mutual of Omaha denied. Terra Tech is a publicly-traded, cannabis-focused agriculture company that has experienced enormous success in this market. On top of their growth, this company complies with all strict legal statutes regarding cannabis in the state. However, despite all this, he was still declined. Mutual of Omaha stated in their declination letter to him that the denial was based on his affiliation to the marijuana industry; a statement that does not make a whole lot of sense. Peterson wanted to buy a personal life insurance policy for the reason you might expect: he wanted a way to provide for his family in the event of his death. He wanted a way to pay income to his family so that they would not be struck by financial hardships should he be unable to provide for them. But nonetheless, Mutual of Omaha declined.
One of the main issues is the tendency of insurers to view the cannabis industry as a “risky lifestyle”, and equate it to the level of skydiving or race car driving. The cause of this issue is the lack of data available so far for insurers to accurately analyze the risk exposure in this industry, and to properly classify it. While some insurers will outright deny coverage to individuals in this industry, others will just charge a higher premium to cover the perceived risk. There are, however, insurers who have stepped into the cannabis arena to insure with normal parameters.
It is worthwhile to ask your insurance agent what options are available to you in obtaining coverage for life insurance, and if they have appointments with the companies that can handle the cannabis industry classification. At Cannabis Insurance Associates, we have an in-house life insurance team who can take you through the steps of finding out if there is coverage available for you and your business.Life Insurance in the Cannabis Industry