Do I need a safe for my Marijuana business?

Do you need a safe? If you are not insuring your products for theft then the insurance company does not require an 800lb safe with a one hour fire rated bolted to the ground. The underwriters came upon this size after studying years of robberies of Cannabis stores. A safe’s job is to slow down the bad guys. Are all safe’s created equal? Here is a quick educational video. https://youtu.be/ltK-bDbADa8 . Just because a safe’s door looks big, doesn’t mean it keeps your products safer. There are a lot out there that have skinny metal and sheetrock.

In Washington State, I talk with Dave Giussi about quality safes. He is the owner of Graffunder Safe and Vault and understands the industry. I would not feel comfortable with $500,000 worth of concentrates being stored overnight behind just sheet metal in a locking file cabinet. Contact Dave if you want good protection for your products.

Here is why a safe is bolted to the ground: https://youtu.be/B8ViUdd-2LM

Another box store safe: https://youtu.be/BjHnklj6PAs

Products Liablity & Marijuana Insurance

Products Liability is a huge question for a business owner in today’s market. Yes, it is expensive however with the average cost of defense running at $500,000, it becomes smart money. Recalls and lawsuits are expensive. Yes, there are cases that are cheaper and plenty that are more expensive. As you are thinking of protecting your investment, think of how many product recalls occur in the US on a weekly basis. Did you know that there are websites dedicated to this? Most of us have received at least one notice in the mail concerning our cars. Why would we think that a fast moving industry such as the marijuana industry would be different?

If you are a dispensary or a retail store then you should consider adding it to your store’s insurance package. When there is a suit, everyone possible gets named and it usually takes a lawyer, money and time to get untangled from a lawsuit. Our first run in with this was the Mirth Soda in three of the legal stores in Washington State. Who do you think would be named in a lawsuit if a bottle exploded in a customer’s hands?

If you sell Vape Pens and do not have Product’s liability then you are in a risky situation. The batteries can catch fire and the US Department of Transportation has limited them on flights in the US. There have been instances where Vape Pens have exploded. Be a Captain of Industry and know every step of production underneath your operation. By understanding where your products come from and how they are insured/treated only promotes your long term success.

Grower and processors, the first chance that you can cover your products, cover them. The Marijuana industry came out of the shadows with little regulation and oversight. Do you follow good manufacturing procedures? When was the last time you checked the chemical list for banned substances? Is your equipment being cleaned between runs of different growers or are you blending products? Being careful also includes being careful about what you bring in to your product stream.

There have been policies that I have refused to sell because of clauses against Cannabis/Marijuana’s product liability. A client buying a product has an expecation of the product being safe and if they find out otherwise then you are looking down the wrong end of a lawsuit. You never know who is going to try to take a short cut below you on your product stream and you don’t know how someone is going to use your product when you sell it. If you want to protect your business then you have product liability.

Can my kids get poisened from Halloween candy?

Happy Halloween!! As a dad and a professional in the Cannabis Insurance Industry, I get a flood of scary things about the creepy neighbor down the street poisoning my 9 year old. Last year it was from the newly licensed Recreational Marijuana Stores in Washington and Colorado. It appears to have dropped off the social media darling list for now but I think that the week is just starting.

We have Police Department.
We have Forbes.
Snopes talks about it.
Wikipedia talks about it.

Let’s skip beyond the obvious that Edibles can be expensive or who would think of doing that to a kid doing Trick-Or-Treating. How many kids have been poisoned over the years from Halloween?

I am going to go with a Professional, Joel Best, a sociologist at the University of Delaware who specializes in candy tampering legends. Best looked into all the newspapers published between 1958 to 1983 and found fewer than 90 instances that might have qualified for actual candy tampering. Of those, he found five child deaths initially thought to be caused by homicidal strangers but none were investigated. For example, one was a child eating uncle’s heroin stash. A child is more likely to be injured by being struck by a car than finding candy laced by strangers.

So when Halloween rolls around have fun. Send the kids Trick-or-Treating making sure that they can see and be seen. Check the candy for anything damaged. Have fun because the odds are favor that you will get sicker from all the sugar than anything drug laced. Don’t believe the hype and have fun. If you want to talk about insuring a Cannabis business then give me a call.

How do I start a Marijuana Business?

These days it seems like everyone is trying to find out how to start a marijuana business. Some call it a ‘Green Rush’ others just smart business. After all of these years working around the industry, I have developed some tips:

1. Walk away from the $9,000 lawyers and talk to an assortment of experts. One of the best is the 420college. They have classes in a bunch of states and assemble some of the best people that I have met in the industry. It is also at the most reasonable prices with the ability to come back.
2. Select a specialized accountant. The 280E is no joke. Find someone that will work with you and not just take information from you. Al Capone was snagged for taxes don’t be that person.
3. Select an insurance expert. Find someone that is current in the industry. You shop for experts, let your experts shop for products. They can even start advising you on underwriting pitfalls such as protecting your marijuana in a particular size of safe so that it can be insured.
4. Select a legal expert. Find someone that understands the laws. For example in Oregon there are some areas that will not allow a marijuana business.
5. Join an association and find out what associations your experts are in. Not only do some associations you get benefits, you also can meet other professionals and educate yourself. In Washington, I recommend checking out Coalition for Cannabis Standards and Ethics as they are a good mix of benefits, lobbying and networking.
6. Build a business plan and understand product flow, people flow and cash flow. Do not bank on product selling itself and that bad things won’t happen to you. I have seen dispensaries shut down for Robberies and wind wiping out crops.

This is a business like any other with thousands of people wanting to make money. Many of which will not set themselves apart by doing the hard work and learning everything that they can. It is not for everybody. Good luck, I look forward to seeing you out there.

Lloyds and Marijuana Insurance

I get questions about Lloyds and Insuring the Cannabis Industry on a regular basis. It can be from a new client in Colorado to an old one in Washington asking about renewals. (The two questions that I have had this week).

There are actually quite a few articles on the subject talking about how horrible this event is however I have found the experience refreshingly old school. I tend to refer people to industry Articles about Lloyds leaving the business.

Today was the first time that I got a hard copy letter from the carrier stating the end of Lloyd’s and Marijuana Insurance. Check it out:

It had little effect for my clients because the previous February, I switched over to Hannover as a primary carrier. I work with multiple companies. It is an ongoing process to see what company can do for different categories of clients. I have literally told client’s if they find a company that is better than the one I am using then let me know as I am more than happy to add on to my offering.

Insurance has always been about the customer. Picking good insurance involves picking a good broker.

We will fire no weed before it's time.

This weekend was Hempfest in Seattle. 24 years of the Marijuana community coming together and having a huge party. There are bands on stage. There has been Bong-A-Thons. Celebrities show up like Tommy Chong and Woody Harrelson. Then why was I 180 miles east?

I was in for a Man –I-juana weekend. It was a week ends of firsts and of high danger. This was not a Kumbaya love fest where everyone holds hands. This was a joint smoking, beer swilling, everyone grabs a shovel to save the Farm weekend. I got in late Friday evening when one of my clients called about Chelan being fired and what was his coverages. From that we developed a plan.

We were going to talk in the morning and evaluate the situation, get power running and the farm up and running. The farm survived the night as it raged on one mountain side. The sheriff ordered an Evacuation level three (everyone out because of danger) and at one point told them that ‘they wanted that pot farm to burn to the ground.’

When I showed up the entrance to the valley was blocked and the sheriff was not letting anyone in. By checking the map, I saw that there were other entrances that got to where I needed to be so I found a secondary route into the valley. I got to drive over some power lines and headed to the farm.

I had my first introduction to the team and the first silver bullet for the night. There was ash raining down in the air as we checked the electrical lines for the greenhouses. Since everything was 110 plugs, it was a matter of running electrical cords with a generator. I had a 135 watt solar panel with an 800 watt inverter attached to the deep cycle battery. I need a better battery pack and possibly a stronger inverter. It was weird that with so much going on there was no cell services so my wife wouldn’t get my call until I hitched a ride into town.

Before diner a woodpile flared up across the way and so we grabbed shovels and went for it. A couple of the neighbors showed up with an Orchard sprayer and shovels. The neighbors were amazed that an Insurance guy would be out in the smoke with everyone and they gripped that they couldn’t get coverage for their cherries. There was a good dirt road to act as a barrier and the first appearance of the fire department. We hung out and found out that they weren’t going to do anything major until structures were threatened. This means that crops and livestock were not on the list to be saved and for the most part we were on our own.

We retreated for the food and to watch the hillside slowly burn. Booze, burgers and joints were passed around as we talked under the glow of the wildfire until one by one the majority crawled into a bed. There were rockslides, burning logs and bleating goats to wake everyone on a regular basis. Every couple of hours a spot light from the road would shine up at the fires. We would all say to each other, ’Yup that’s a fire,’ to highlight the ridiculous attitude of the officials. A few of the guys stood watch throughout the night. We knew if it hit the hay field then we could lose everything in a firestorm.

I rolled out of bed around 5:30 as the fire was to the first hay field. The fire department finally made an appearance with an engine. After a coffee run and what seemed like hours of debate. They finally let the farmer disk the field and the fire to burn itself out. We retreated again for food and work as the fire department watched the situation from a comfortable distance.

After we got generators up and running for the green house fans, it was pretty clear that the action was done and my smoky butt should go home. After a day and a half, I felt like I rubbed myself with cheap grocery store bacon. We learned some good lessons.

1. Don’t expect the police to be friendly despite doing a legal business.
2. Do expect the power to go out.
3. Do build a way to defend property against fire and a team that will fight.
4. Do look at insurance coverages for property to give you options.

Man –I-juana is a the can do spirit of the entrepreneur that will fight to build an industry. Will stand and deliver when others run from the fight. You may never see any of the guys that I say on a main stage celibrating, they are too busy with the hard work of fighting fires with shovels.

Having your business survive a Wildfire.

I started fielding calls last night for the latest round of Wildfires in Eastern Washington. With high winds, draught conditions and lightning strikes it made for a long night. Some of the best growers in the state are in remote areas that property coverage when possible is costly. With the trends of the last couple of years, the price of fire insurance for property will continue to rise. Insurance is to get you able to rebuild. Yes, it can be costly however do you want to start from zero or do you want to have money to rebuild?

One of the first things that I talk about is defendable space. Clearing brush and barren roads help reduce the chances of fire jumping. There are plants that resist wildfire better than others. Remember it is only a reduction. Keep sprinklers running to reduce flare ups on your outdoor crops. Last night was a grim reminder no barrier is 100% effective as we had fire jump the Columbia River. At almost a mile across, residents consider it one of the best barriers for fire and it failed. If you are ordered to evacuate then get out.

The major issue for remote location is power. You cannot run your fans or your pumps with no power. Some of my guys favor small generators but quite a few are on solar. I am taking out my Teardrop trailer today. It has a 135 Watt panel on top and with an inverter; I can run a large portion of a client’s farm. The lack of power left large portions of last year vulnerable during last year’s season.

Lastly, if your crops get hit by the fire retardant, rinse off as soon as possible or else your plants’ leaves will burn. It can stain paint and discolor metal. Don’t let pets drink from puddles.

Good luck out there and stay safe.

Myth: Marijuana Insurance is not consumer friendly....

You can shop for Insurance for your Marijuana Business, however the approach is different. Most people are used to getting insurance for their home or auto. There is an Independent Agents, Farmers, All State, Progressive, etc… on every corner and if you go to the internet more choices. You can have a dozen different quotes from five companies in under an hour. What happens when all those different choices have only three Companies to choose from?

You create Jam and not in a tasty, good way. It wastes your valuable time as a business owner and it can cost you money. If you want to minimize your efforts and maximize your results for insurance then this is how you do it:

You shop for the broker. Yes, you want to apply some old school methods and build a relationship. By spending five minutes with three or four different brokers, you can save you self a lot of headache and your business a lot money. Here are some questions to ask:

1. How well do you support the Cannabis Industry? Are they a member of a trade association? (Look for someone that invests into your industry instead of extracting from it.)
2. Is this a normal product line? Does the agency have people dedicated to it or do they do one or two policies a year? (You are looking for someone that has current knowledge of the industry.)
3. How many companies do you work with? Are they directly connected to a whole sale insurance company or do they go through multiple brokers? (Insurance companies can add fees pay attention to the quotes as fees must be spelled out what dollars is going where).
4. Do they bring anything else to the table? Can they help with Health Insurance or insuring your transportation vehicles? Do they know Finance Companies? (A broker that has successfully worked the Marijuana Industry will have valuable contacts and resources that can improve your business.)
5. Do you have discounts? (Yes, there are a few of us that have discounts available).
Yes, I do get quick requests of ‘send me an app’ or how much for ‘$1 million in liability’. If you want a inexpensive policy that covers what you think it covers then spend the five minutes and talk with your Broker. Ask your current broker a few of those questions. You are a business owner, shop for a broker throughout the year.

You can always make the change in the quoting process or that 30 day renewal time. The broker of record letter looks like the following.

It is no big deal to get the policy that you want for your Marijuana business, at a good price. Just go a little old school and shop the broker not the policy. If you send a request to my website, I do ask questions.

I have been asked what about Lloyds of London, too many times during the last week. Here is some clarity:

1. Yes, in May 2015, Tom Bolt wrote to the U.S Syndicates that it will no longer write for the Cannabis Industry. He is the Director of Performance Management so when he wrote: “Any policies of this type that are currently in force should not be renewed and no new business should be written. Existing quotes issued before today should be notified to your Syndicate Underwriting Performance account executive who will consider on a case by case basis whether the quote may be honoured,” it should be taken seriously.

2. In February 2015, Insurebud began transitioning its new and renewal customers to new carriers. The new carriers are higher rated. There is a wide selection of coverages. When I compared pricing directly, the new carriers were saving the clients hundreds of dollars. The response time has been better with one quote taking a two hour turnaround time when I needed a rush.

3. When shopping for your marijuana insurance for your business. You want to look for a couple of things:
a. Is your agent knowledgeable with the product line? A poorly written application can cost you money.
b. Are they adding on fees? If they are going through multiple brokerages then there are multiple fees. Yes, there are some policies that my agency takes home $80.
c. Do they offer discounts? Some agencies offer discounts and are resources to your business.
d. Are they a part time player or are they serious? The same person that does your auto policy might not be the best for your Cannabis policy. A change in law or even how an insurance policy can cost time and money to your business, an agent is another resource about your industry.

4. With Lloyd’s leaving the business, there have been fears that there will be an increase in cost. I have not found those fears to be justified. I would rather have one good carrier than ten lousy ones. There are probably 2000 policies in the United States so your common carriers such as Allstate, State Farm, etc. will probably never have a policy for the marijuana industry. They don’t want the fund an insurance pool nor do they want the risk associated with a Schedule 1 Drug.