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Perspectives: Marijuana Dispensary Industry Finding Insurance Options

About two years ago, insurance broker Michael Aberle started to take a look at insurance for medical marijuana dispensaries, especially when his stepmother had cancer. Quickly, he realized his clients had a passion for it and Aberle found the hard-to-find niche he was seeking."I brought it to my bosses and thought I was going to have to really convince them," said Aberle. "I think they said 'yes' and I kept talking, making my sales pitch, before I realized they were behind the idea."Aberle, now the head of the medical marijuana dispensary group at Sacramento, Calif.-based commercial broker Statewide Insurance Services Inc., got to work "gathering data to find the risks and the holes," he said."One thing you learn right away is this industry is very cooperative," Aberle said. "They want to be treated professionally, not as a joke. They are really there for the patients they serve and want to be treated like any other medical facility or pharmacy."The marijuana dispensaries, collectives and cooperatives value privacy most of all, Aberle said. "Privacy is our founding rule," he said. "These businesses are not hiding. They advertise. They pay taxes. But they want privacy for patients."Privacy is valued so much -- even more so than pricing -- that Aberle found many dispensaries to be "more secure than check-cashing places." They have video cameras, bullet-proof windows, alarms and secure entries."The fact is, this is a high-value inventory," Aberle said. "It is a great risk and no one understands it better than the people in the industry."Currently 14 states have medical marijuana laws on the books but just five -- California, Colorado, Maine, New Mexico and Rhode Island -- allow for collectives and dispensaries, Aberle said. With growing public support for marijuana as a medicinal drug, Aberle sees opportunity. A lot of other states, like Oregon, are looking at initiates. "It is good to see the birth of an industry," he said. "You don't get that often. There is a definite need here."The business has its challenges. Though Aberle said the insurance industry appears to have no problem with the risk, it is still illegal under federal law. Each dispensary is governed by laws of the county where it resides, and its ordinances. Aberle must keep up with constantly changing laws and moratoriums, and there is fraud. Aberle admits insurers have laughed at him when he brings up the medical marijuana industry but "many are interested."The medical marijuana industry has also produced opportunities for others, including delivery services. Statewide Insurance offers a range of coverages such as general liability and property coverage for theft; spoilage and equipment; workers' compensation; commercial automobile for delivery exposure; and farm coverage. Statewide Insurance has been acknowledged by the American Alliance for Medical Cannabis.Aberle said about six carriers are writing this coverage as an enhanced business owner's policy."Underwriting guidelines are restrictive but insurers and dispensaries are willing to engage each other now," Aberle said. "The guidelines will mean less losses over time, which will get more insurers interested and help provide choices for the insured."Aberle has been invited to the THC Expo, the largest hemp expo in the world, in Los Angeles. Statewide will look to cater to the hemp industry as well.(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)


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