Toronto-based CannaCover: Cannabis industry still neglected by insurance companies

CannaCover, a Toronto-based insurance brokerage that helps licensed cannabis producers, landlords, dispensaries procure coverage exclusive to the industry, says the cannabis industry remains “tight,” as it offers “very little options” for businesses in the field.

As Canada, inches closer to marijuana legalization this summer, CannaCover says it “suspects more insurers to begin easing their fears and entering the industry.”

But when asked if the brokerage is seeing this take place, CannaCover’s broker Andrew Mangialardi told The Puff Puff Post: “Unfortunately, no.”

“To date, the market has remained relatively tight with few coverage options for cannabis operations,” Mangialardi said.

“We anticipate once the law is passed the cannabis-coverage industry will change rapidly and we hope to capitalize on these changes.”

On its website, CannaCover says it generates inquiries from business owners from the industry. The company currently accommodates licensed producers, landlords, manufacturers of by-products, and consultants.

Mangialardi says the “biggest hurdle” for cannabis businesses is acquiring Directors and Officers Liability Insurance, often called D&O.

D&O insurance protects companies, their executive officers, board members and employees against demands for monetary damages made by third parties.

But so far, the company is filling some gaps in this niche and burgeoning insurance market dealing with a marijuana market not fully legalized.

Medical marijuana is already legal in Canada since 2001. But this summer, the recreational use of cannabis will be legalized nationwide.

“We’ve had the ability to write policies that other brokers have been unable to accommodate due to our existing relationships,” he said.

One of the biggest issues is “product recall insurance, for example is not broadly offered to [licensed producers] LP’s.” But Mangialardi said it will “will certainly be a staple to producers moving forward.”

He added:

“Cannabis operations should be insured the same as any other commercial operation, but currently that is not the case.”
A marijuana flag flaps in the wind above the crowd at the annual 4-20 cannabis culture celebration at Sunset Beach in Vancouver, B.C., on Wednesday April 20, 2016. (File image via Canadian Press)

Some companies are stepping in

Despite the stagnation on the insurance front, Sun Life Financial Inc. in mid-February made headlines when it added medical marijuana as an option for its group benefits plans.

Cannabis prescriptions in Canada don’t have any drug identification numbers. This has prevented Canadian health insurers from including medical marijuana to their drug benefit plans.

Early this year, medical marijuana patients in Canada protested against taxing their cannabis medications after legalization, saying it should be treated like any regular pharmaceutical prescription.

Sun Life Financial’s move at the time signaled the latest sign of growing public acceptance of cannabis.

Canadians protest against federal govt's plan to tax medical marijuana this summer
Canadians protest against federal govt’s plan to tax medical marijuana this summer. (Screengrab via CP24)

Recreational vs medical

Asked if recreational marijuana insurance will overtake that of medical, Mangialardi said: “This is a major question that without a crystal ball, is extremely tough to judge.”

He said both recreational and medical marijuana industries have “major opportunities at hand.”

He said:

“In the medical space I think the addition of cannabis to benefit plans can play a huge role, especially if it’s utilized as a substitute for opiates.”

Many marijuana advocates including veterans, who suffer from PTSD, are pushing for cannabis as a natural alternative to pharmaceutical opium-based medications to beat to what is currently being dubbed as “the opioid crisis.”

US veterans dump hundreds of empty pill bottles at the White House to demand access to medical marijuana. (File image via The Washington Post)
US veterans dump hundreds of empty pill bottles at the White House to demand access to medical marijuana. (File image via The Washington Post)

Health Canada said there were 2,946 deaths believed to stem from opioids across the country in 2016 and at least 2,923 from January to September of last year

“However, the recreational side has the upper hand with all the new by-products being created. I’d say Medical has a head start but once edibles, beverages, and other products are legalized, it could change the game,” Mangialardi said.

Offering an insurance coverage to an industry that is not yet officially legal is a risk but it is a must-have for any healthy market to flourish. Canadians too are still getting accustomed to what it is for them once legalization becomes a reality.

In early May, Canadian Real Estate Association proposed an amendment to the regulations that would result in a halt on home cultivation until provinces can enact new regulations after Ottawa provides guidelines on how to do so.

Stopping Canadians from growing weed at home will definitely herald a longer waiting period to know fully how their houses or apartments will be insured post-legalization.