Lakeco news reported yesterday…
Continental Heritage Insurance Co. is the first insurer in the state to be approved to offer surety bonds for the cannabis industry.
“Cannabis businesses should have insurance coverage available to them just like any other California business,” said Insurance Commissioner Dave Jones. “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.”
Cannabis Surety Bonds are needed for various entities seeking licensure under the Medicinal and Adult-Use Cannabis Regulation and Safety Act, or MAUCRSA. The state of California requires a surety bond in the amount of $5,000 for most licensing categories.
Surety bonds are required by licensing agencies to guarantee the behavior of licensees. A license bond guarantees that the entity will comply with the laws and regulations for that entity. These bonds ensure compliance with licensure and permit requirements, and guarantee payments related to the cost incurred for the destruction of cannabis goods and materials in the event of a violation of the applicable regulations.
The new program from Continental Heritage is the first-of-its-kind for California’s new and evolving cannabis industry.
Commissioner Jones launched an initiative last year to encourage commercial insurance companies to write insurance to fill coverage gaps for the cannabis industry.
This first filing and approval of commercial insurance for the cannabis industry was announced in November of last year as a successful result of Commissioner Jones’ initiative.
Jones has convened meetings between commercial insurance company executives and cannabis business owners to educate the insurance industry about the sophistication, professionalism and risk management of the cannabis industry. Jones has also organized tours for insurance executives at cannabis businesses.
In October of last year, Jones held a first-in-the-nation public hearing to identify insurance gaps faced by the cannabis industry. Cannabis businesses and insurance industry representatives testified about the limited availability of insurance for cannabis businesses.
The hearing revealed that while there is insurance available from surplus lines insurers, insurance coverage is limited in scope and, until the approval announced last November, commercial carriers were not yet writing insurance.
Jones also announced that department staff would be allocated to cannabis insurance filings.