High on Cannabis

By Tim Kolacz

January 1, 2018. A day that will live in the annals of California history forever. This is the day that Cannabis was allowed for the recreational use by those over the age of 21. Great, everybody can now go to the local dispensary, grab a bag of purple hair Indica and have a fine afternoon. But how did the actual bud, the product, get to you. Who grew the product, who delivered it to the store, who tested it, who invested in the entire process and how did the all of those involve secure their ability to provide the product?

At every level of the process, someone needed to provide the working capital to get this business going. And this is not just some group of people in the Angeles National Forest running water lines; this is serious money.

Millions of dollars serious money.

To get this amount of product to market, one needs to realize that there are several hundred companies that do everything from growing in state of the art hydroponic fields that run 24 hours a day, to the companies picking up the product for distribution to the dispensaries, to the actual retail locations that are either run by the farmers or by independent groups that will run anywhere from one or two stores, to 5 or 10. Multiple large investors come to us before they even jump into the fray so they can get a good lay of the land on what can be covered.

At the end of the day, Cannabis is not that much different from any other manufacturing operation. The product is a flower, not any different than a rose or a tulip. Seeds are planted, plants are grown, and the flower of that plant is harvested and sold at the retail level. Simple. For 40 years Cannabis has been the largest cash crop in California. Now, with its legalization to a large extent, the investor money is flowing in to each part of the chain. These investors also want to protect that investment and that is where the insurance industry has followed suit and is providing the coverage to each and every portion of the process. Additionally, since it’s an agricultural product, there are over 20 carriers that will provide the coverage needed. And they do it competitively.

Crime, Product Liability, Property (i.e. Inventory), and Worker’s Compensation are all items that need to be covered and we can provide it all. The carriers are seeing a dramatic influx in new businesses that are backed by solid business women and men that want to be on the cusp of this new and growing industry. And the carriers want to be part of it because they know it’s a long-term business that will not go away anytime soon and they don’t want to miss out. This is a great time to be on the Green Rush train.

Tim Kolacz is a Vice President of Property & Casualty at HUB International. He helps his clients find the right solution for their business needs. You can call him at 714-922-4234, email him at [email protected] and find him competing in triathlons on the weekend.