California Insurance Commissioner Dave Jones has been on a mission to ensure state-legal cannabis businesses have commercial insurance coverage and with his announcement of the first California cannabis surety bond program on Feb. 21, 2018, he continues to make progress.
Jones has approved Continental Heritage Insurance Company as the first insurer in the state to offer a California cannabis surety bond product.
“Cannabis businesses should have insurance coverage available to them just like any other California business,” Jones said in a press release. “As Insurance Commissioner, my mission is insurance protection for all Californians, which includes insurance for California’s legalized cannabis businesses. I encourage more insurance companies to file cannabis business insurance products with the department to meet the needs of this emerging market.”
For those seeking licenses under the Medicinal and Adult-Use Cannabis Regulation and Safety Act, a cannabis surety bond of $5,000 is required for most license types. A California cannabis surety bond acts as a guarantee that the legal cannabis business will comply with the rules of the licensing authority that granted it a cannabis business license, including a guarantee that the licensee agrees to pay fines associated with compliance violations.
In order to get the insurance industry connected with the state-legal cannabis industry, Jones started a dialogue on the topic back on May 22, 2017. Since that time, Jones has held a public hearing to address insurance coverage gaps for cannabis businesses, approved the first commercial insurer’s offering of cannabis business insurance and provided a list of surplus line insurers willing to work with cannabis businesses.
It is important to note that even with the wildfires that devastated California in fall 2017, outdoor cannabis crop insurance products still aren’t available in the state.