In the last month, two cities have decriminalized magic mushrooms and certain other natural psychedelics. The first to cross the threshold was Denver, in May passing the Denver Psilocybin Mushroom Initiative by a narrow margin. This doesn’t make mushrooms legal in that city but deprioritizes criminal penalties imposed by the City of Denver for possession of psilocybin mushrooms.
The second city was Oakland, CA, which took things a step further. The city decriminalized several entheogenic plants, including magic mushrooms and peyote.
Expanding into natural psychedelics would seem to be a natural next step for those who own cannabis-related businesses. However, it should be noted first that decriminalization does not legalize these substances, and second that there is likely no coverage under your current insurance policies for these substances.
Your business insurance coverage likely contains an “Other Plants and Products Exclusion” that excludes coverage for plants other than cannabis or cannabis related products. The endorsement will look something like this:
Please note that the exclusion applies to both the Commercial General Liability coverage form and the Products/Completed Operations Liability coverage parts of the policy.
What Are The Consequences?
It is important to note that while possession or usage of magic mushrooms and/or other natural hallucinogenics has been decriminalized, they have not been legalized. Dispensaries or other retail establishments may be subject to legal action even within those cities where decriminalization has occurred.
In addition, you may lose your insurance coverage. Insurance carriers who discover their insured producing, stocking or selling these substances may choose to cancel your policies outright or nonrenew them upon expiration. Since these substances are still illegal it would be impossible to place coverage with another carrier.
Don’t lose your livelihood. Check your policy or contact your Hayes Broker today to schedule a free, no-obligation risk management analysis to discuss your current insurance coverage and how decriminalization of natural psychedelics could affect your insurance coverage.