Marijuana Business Magazine - January 2017

by Margaret Jackson PREPAR¬NG for the WORST Marijuana growers can tap crop insurance, other options to protect their plants against loss T he deadly wildfires that ravaged Northern California last fall torched more than 30 marijuana farms. The devastation delivered a harsh reminder to the cannabis industry: Most growers lack crop insurance to protect themselves in the event of a major financial loss. By contrast, mainstream farmers across the United States can insure their wheat, corn and other crops against natural disasters and tumbling farm prices thanks to Uncle Sam. Chalk it up to a government-run company, the Federal Crop Insurance Corp. But federal crop insurance is not an option for cannabis cultivators, whether they’re growing hemp or marijuana, because the plant remains illegal in the eyes of Uncle Sam. Insurance, however, is arguably more important for cannabis businesses: They’re not eligible for bankruptcy protection and often can’t rely on tradi- tional banking for a short-term loan if something goes horribly wrong. If there is a loss that’s not covered by insurance, there may be no way to recover. “If something were to happen, if there were a fire or a big theft, you’re just in trouble,” said Gerry Jones, managing partner of Cannabis Insur- ance Solutions, a brokerage in Little- ton, Colorado, that provides insurance products to the cannabis industry. “It takes three months to regrow that crop, and the margins are really thin.” A handful of companies will cover marijuana and hemp growers through a form of crop insurance – provided the plants are cultivated indoors or are inside a facility when the loss occurs. A typical crop insurance policy costs from 1.5% to 1.8% of a business’ total revenue. But you need to pick your agent and policy carefully, and there are some other insurance products businesses can purchase to help when disaster strikes your crop. Here are tips for how to safeguard your plants against loss. January 2018 • Marijuana Business Magazine • 41