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Work Comp Exemptions for Marijuana Businesses

Work Comp Exemptions for Marijuana Businesses

As the marijuana business landscape continues to change in California, so do the insurance rules. In many cases, what you don’t know could actually save you money. Nonprofit vs. For Profit With the implementation of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) in January 2018, adult-use cannabis businesses now have a choice. These businesses may now be organized as non-profit or for-profit. There are advantages and disadvantages to both types of business formats. If you are still deciding which is right or your business, a great article on the pros and cons of each can be found here. Whether you are just starting out or thinking about converting your business from non-profit to for-profit status, you should know that status affects your workers’ compensation insurance. What Does Work Comp Have To Do With It? As you are aware, workers’ compensation insurance is based on the number of employees and their payroll. The more employees you have, the higher your payroll and the higher your insurance premium will be. Non-profit businesses must report all payroll, even for owners and officers. This is an added expense when for-profit businesses can exclude owners and officers from coverage. There are caps for payroll for the following: Executive Officers, Partners, Individual Employers and Members of a Limited Liability Company. The minimum reported payroll for included officers is $52,900 and the maximum is $133,900. However, even those amounts can have a significant impact on the Workers Compensation premium. Have You Made the Change? If your cannabis business has converted from non-profit status to for-profit status, you should be aware that the status...

June 2019 Cannabis Update: To Shroom or Not To Shroom?

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....
Cannabis Insurance Get-Started Guide

Cannabis Insurance Get-Started Guide

The new year brings new opportunities in many parts of the country where cannabis has finally been legalized. Whether it was medical, recreational, or both, the ability to legally sell and obtain marijuana has many dreaming of starting new businesses. Finding a location and product suppliers are important. Getting the proper licensing is a must. Learn all you can about the business before you get started. And don’t forget about insurance. Hayes Brokers has been insuring cannabis businesses since 1996, when it all began in California. In fact, we wrote the book on it. Now, we can insure cannabis operations in every state where it is legal. Here’s how we can help you. Liability Insurance for Cannabis Businesses If you own a retail operation such as a dispensary, you’re going to need general liability insurance. Your landlord may require it, but even if you don’t have a landlord, this coverage will protect you in many other ways.   Premises liability will protect against the odd bodily injury (slip and fall) claim made by customers and visitors. It will also protect against property damage claims by those same visitors. This coverage works like prepaid legal. Should someone threaten to sue for bodily injury or property damage, the coverage will provide legal representation for your business. If your business is found liable, the policy will pay the claim (indemnify you) up to the policy limit. This is the most important coverage you can purchase as a business owner. One thing not covered under most standard Commercial General Liability policies for cannabis businesses is products liability insurance. This coverage can and should...
Get It While It’s Hot: Products Liability Insurance

Get It While It’s Hot: Products Liability Insurance

The July 1, 2018 deadline for updated packaging has come and gone with store shelves looking a bit empty. Retailers and distributors are even still trying to unload items with the old packaging. Though a lawsuit could happen at any time and for any reason, non-compliant packaging could become a source of individual or class action lawsuits. Is your business ready? Even if you have a lawyer on retainer, these lawsuits can get expensive. The best way to protect your business is with Products Liability Insurance. What Is Products Liability Insurance? Products liability insurance is often referred to as products and completed operations insurance. It is sometimes, but not always, included in a General Liability or Business Owners Package policy.  However, this coverage is usually excluded for cannabis operations. The Insurance Services Office (ISO) defines products and completed operations hazard as “‘bodily injury’ or ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’…” (CG0001 Page 15). While this is a standard definition, it may vary slightly by insurance company and policy. It is important to note that products liability covers not only a physical product but also work product such as building and installation.  This coverage is triggered by bodily injury (including death) or property damage.  However, products liability insurance does NOT cover product recall. Do You Have Products Liability Insurance? The best way to determine if you have products liability coverage is to review your policies with your insurance broker.  While this coverage is often included in some policies, it is far more common that it is excluded for medical and recreational cannabis operations due to...
Trump Administration Reigniting War On Cannabis?

Trump Administration Reigniting War On Cannabis?

The high times, they are a-changin’. Or perhaps not. In 2014, then-President Obama quietly “ended the war on marijuana” by instructing federal officials to stand down from raiding cannabis operations in those states that had voted for legalization. In December 2015, he also signed a budget bill that included language that all but legalized medical marijuana on the federal level, specifically prohibiting the banning of federal funds being used by veterans for medical marijuana treatment in state-approved programs. That all may be changing. It has recently been reported that Attorney General Jeff Sessions plans to reverse the previous directive, granting the federal government the right to reignite the war on cannabis. Will this have an effect on your business and the cannabis insurance industry? Probably not. Here’s why. States Aren’t Going To Take It In those states where marijuana has been legalized, the industry is big business, creating significant income for business owners and tax coffers. Those states won’t take federal interference lightly. In fact, California Attorney General Xavier Beccera has vowed to “vigorously enforce our state’s laws and protect our state’s interests.” Colorado Attorney General Cynthia Coffman (now a candidate for governor) made similar statements. Also of note: 12-year-old Alexis Bortell is taking on Mr. Sessions. The preteen will have her day in court February 14, suing the federal government for her right to continue to access cannabis treatment for a seizure disorder. Money Talks It was widely reported after the Sessions memo came to light that cannabis industry investors were running scared. Forbes said just the opposite, quoting investors who noted that the directive didn’t really change...