Insurers still at roadblocks over pot, despite impending legalization

Published: April 30, 2018

Updated: July 24, 2018

Author: Luke Jones



The federal government’s plan to introduce legalized cannabis for recreational use is imminent, with the law to come into effect no later than July. However, the insurance industry is still fuzzy on how it will manage widespread marijuana use, and experts are warning now is the time for providers to make their position clear.

While pot legalization in Canada for recreational use will be a new law, the concept is hardly a new and insurers have not been broadsided. In fact, Justin Trudeau made legalization one of his Liberal Government’s campaing promises during the 2015 election campaign. Also, the industry has had some practice considering medial marijuana use has been legal since 1999.

Still, there is a feeling being projected by providers that they have not had enough time to prepare.

“Over the past 12 months, the climate rapidly evolved to reach a point where the majority of legal cannabis businesses and related businesses can now find broad coverage for all of their property, business income, and liability insurance needs,” said Brody Stonehouse, general manager, AC&D Insurance, and speaker at the upcoming Cannabis Cover Masterclass in Vancouver.

He added: “The primary difference is that, despite the availability of broad cover, the number of insurers offering cover for these businesses is very limited which results in limited choice and, with this, higher costs.”

Stonehouse says insurers still misunderstand marijuana and it is hindering the development of a workable cannabis market framework.

“I have approached almost every domestic insurer in Canada over the past 10 years and, until very recently, I would typically get a chuckle at the mere mention of developing insurance programs for the cannabis industry,” Stonehouse told Insurance Business. “Even though Lloyd’s markets have been one of the largest players in the medical cannabis business to date, and despite an increasing number of studies suggesting otherwise, there is often still a perception out of London that cannabis does not truly have any medical benefits and that persons that use cannabis are of a lower class.”

“Eventually insuring Cannabis businesses will be as commonplace as insuring any other business,” he added. “The biggest opportunity is for those brokers that get in the market early, learn the intricacies of the industry, and build a strong relationship with the cannabis industry. Insuring cannabis businesses is the same as insuring businesses in any industry. Those that specialize and have a true understanding of the needs of the client will be the most successful.”