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you okay guys greetings welcome to the May sila foundation webinar on ensuring cannabis risks I'm Cindy Davidson the education trustee for styler Foundation and today we are delighted to be hearing from Linda McHenry Linda has worked in the property casualty side of our business for many years and is widely known and highly respected insurance professional writer and teacher she writes a terrific blog available on her website Linda McHenry comm and also recently launched a brand-new podcast called taking the mystery out of insurance in fact literally just two days ago she released a podcast on business interruption insurance and a pandemic which is excellent and I highly recommend giving it a listen however today and Linda will be helping us to understand the challenges of insuring cannabis risks we've got conflicting state and federal laws very few carriers willing to issue coverage banking and finance complications of a largely cash-only business and a fledgling industry whose insurance needs range from crop insurance to workers comp to cgl property damage and product liability we have an hour and although you are all on mute we will take questions through the Q&A function and we will leave time for questions at the end please do use the chat if you're having any technical issues and we'll try to help you out and with no further ado I'll turn this over to Linda McHenry thanks so much Cindy I really appreciate this opportunity to be with you folks today and share some of the information that I have picked up over the course of my time working in partnership developing and teaching courses for 80 banker and company so I'm gonna go mute now with my camera but not my voice all right I just wanted to say hello let you guys see that I'm really live in here and you know the cannabis industry is changing daily and now because of the corona virus pandemic the landscape is even more fraught with uncertainty in tension I if you want to move the advance the slide for me I do have a handout for today's PowerPoint so if you want a copy of the PowerPoint slide deck you can either email the sila foundation at the email address on your screen or you can send me an email and and we'll send you a PDF copy of the PowerPoint slide tech you go if you move on now to the next slide please for those of you who are not familiar with the background and underpinnings of the challenges and conflicts facing the cannabis industry and those of us needing to insure it let me do a quick review of the biggest issue the differences between federal and state laws next slide the Controlled Substances Act places federally regulated substances and drugs into one of five schedules placement is based on the substances medical use potential for misuse or abuse and safety or dependents liability and there are a few other factors that are included in there I'm not going to bore you with all of them but cannabis has always or marijuana has always been in Schedule one of the Controlled Substances Act and hemp was in there as well until the 2018 farm bill so what we saw a couple of years ago is once hemp was moved into Schedule three a lot of people said oh good good good I'm not gonna bother growing cannabis which is illegal still under federal law I'm gonna grow hemp and well it's not quite that easy and I'll explain that to you a little later on because the USDA does have some rules and requirements next slide please here is a state map that you can find on the website of D is a global solutions which provides workplace safety and compliance services and when you get your PDF copy of the slide deck if you click that link it's going to take you to the internet and you're going to see a list of all the 50 states and the District of Columbia and it's going to let you know what the legal status is of of marijuana and the information I'm sharing with you is current as of I don't know last week so it's going to keep changing if you'll advance to the next slide this is a summary of what is on their website and what is listed for all the states and you know it's it's the legalization process isn't real easy there's 11 or actually 12 states now that allow the recreational use of marijuana by adults and medical use and so it's fully legal and then we hear the term decriminalized and a lot of people think well gee if it's decriminalized it's legal and that's not really the case fully legal means a person can use possess and grow marijuana under state law if user possession has been decriminalized it means it's no longer a crime to possess a small amount of the drug although it can still be confiscated and civil fines can still be imposed now the thing is is every state defines what a small amount is so it can be different so if you can go from one state to another and bring your pot with you and you can be okay in one state and not in another one legalization means the state has laws that regulate its use possession cultivation sale and distribution so although it's legal it doesn't mean you can do whatever you want with it you still need to comply with state law especially when it comes to the cultivation so again decriminalization only means that possession of small amounts won't get you charged with a crime and I from what I've seen about a quarter of an ounce seems to be the most common definition of small amount so in the states where it's medical and decriminalized that means even if you want to use marijuana for recreational purposes if you have that small amount you're not going to be charged with a crime but in the states where it's medical only those states actually have different laws about how it can be used medically in the states on your screen that have the asterisk next to them they can only use CBD oil legally alright so again each of the states is going to handle it differently so that's gonna be changing I know that I saw something recently about something I guess Vermont just was the wealth state you know a month ago or two months ago there was stuff going on with that so you want to make sure you understand what's going on because as people come to you and they talk to you about their business you want to make sure you ask them are you only doing business in this state are you going to be shipping to another state are you going to be delivering to another state are you going to be growing in another state because not everyone is aware that whatever is going on in a cannabis business needs to be compliant with the laws in all the states next slide please here is a rundown on a recent court case in fact I got an email about this yesterday all right and and we're seeing conflicting rulings by federal courts in different states about what's going on with marijuana and there's reasons for that so let me give you the background on this case and then tell you what's going on in the federal in the federal court so in this particular case the defendant was a marijuana grower who had obtained a multi-million dollar loan to expand its business in Nevada and the owners failed to repay the loans so the lender which was named in loan provisions branding it right of first refusal to obtain shares in the defendants business industries sued and it sued for breach of contract obviously not paying the loan and it also sued for unjust enrichment relating to operating capital all right so basically the lender lent the money and the business used that money to become more profitable and sell product but it never paid the loan back so that was what was viewed as the the unjust enrichment now the defendant said hey you know we didn't break the law we can't be held liable for breach of contract because that contract is considered illegal under federal law and specifically the Controlled Substances Act because marijuana and marijuana businesses are illegal you know you can't enforce this contract well Nevada federal court agreed with the defendant and ruled against the plaintiff and ruled against enforcing the contract because it found that the provision granting the lender right of first refusal and providing that money to fund the expansion of the business both those provisions violated the Controlled Substances Act because if it had ruled in favor of the plaintiff the plaintiff would have profited from the sale of marijuana which is illegal under federal law and they provided direct financial assistance to the defendants cultivation of marijuana so the legality of marijuana in Nevada doesn't matter in federal court federal court doesn't care and it says gee federal law trumps state law due to the Supremacy Clause in the Constitution so that's what some of the courts are saying so basically if someone Sue's and they're prevailing in court would be an act that violates federal law then federal court doesn't want to enforce those contracts but if somebody Sue's under an insurance policy or under a labor law or because intellectual property rights were violated yeah it's a cannabis business but the nature of the lawsuit doesn't have anything to do with the legality or the illegality of cannabis and in those cases federal court seems to be enforcing the contracts so you're gonna need to pay attention and follow what's going on in the judicial system again in the states where you do business and nationwide to see what the trends are because this is how it happened in Nevada last month but that may not be how it is in Michigan or how it is in Massachusetts or California or Colorado or Washington or any of those other states where it's fully legal and it's certainly going to be different in the states that have not fully embraced legalizing marijuana next slide please I want to explain the difference between marijuana and hemp because there was an interim final rule at the end of last year relating to hemp production and again a lot of people think oh I'm gonna I'm gonna have a business that we just focus on CBD oil and we just do hemp and a lot of people have have confusion about it marijuana and hemp are both different forms of the same cannabis plant the big difference is that marijuana has much higher levels of THC than hemp does and THC is a form of cannabidiol that's what a CBD is and there's more than a hundred of them that have been identified in the cannabis plant and although CBDs are mostly found in marijuana trace amounts are found in hemp and excuse me smaller amounts are found in hemp and there's even two other plants that they found trace amounts and I find this kind of interesting there's a sunflower plant called a helichrysum and then in cone flowers which we know is echinacea they actually have trace amounts of THC but the that's the that's the big issue here they're under federal law because the tea is the mind altering or psychoactive component it's all a high and has it and hemp doesn't have it in sufficient quantities to give you the high the other thing about the plants is they're grown differently and they're used differently hemp is used industry industrially to make thread and fiber and those plants can grow much much taller and when they're cultivated they're cultivated closer together and they're not allowed to branch out as much because the leaves aren't as important as the stalks and the seeds marijuana on the other hand they take the leaves and the stems and the seeds and they're all very important the federal government and I'm going to explain that to you when we talk about the farm bill the 2018 farm bill says that hemp is defined under federal law me if it has point three percent or less excuse me under point three percent THC by oh wait so that's the federal definition and again if you get the PDF handout if you click that link for the USDA website you're gonna get some more information about that next slide please so before I do the 2018 farm bill let's just give you a little background because in 2014 the hemp industry received a boost the federal government allowed it to be cultivated if state laws went along with it by certain colleges and universities and certain state agriculture departments so if they wanted to grow it industrially they were able to do it and that's when the federal government first defined the THC threshold it didn't remove hemp from schedule one so it's still under Schedule one which is supposed to be drugs that have a high potential for misuse and abuse that have no known medical use or no no sufficient evidence of it again in the in the opinion of the federal government but it allowed these colleges and universities and and state agricultural departments to have these hemp programs next slide the 2018 farm bill changed all that because that moved hemp from schedule 1 to schedule 3 and it said you can legally grow hemp if you meet certain guidelines and requirements only it didn't set them all up it established some of them but it didn't establish a lot of them and there was a whole lot of confusion about it but it did redefine hemp added some more components to the definition but that THC threshold didn't change it also said that the federal crop insurance corporation could insure hemp as a covered commodity but it didn't have any underwriting guidelines or any rules or whatever and there were an awful lot of questions so again not all the states embrace this all right when the federal government said that that you can grow hemp and you can insure hemp on crop insurance again a lot of private insurers we're ensuring it not all the states allowed that next slide please so the USDA at the end of 2019 did come up with an final rule and basically a state cannot have a program a hemp program that isn't first approved by the USDA so Indian tribes can apply for a hemp program if they are federally recognized and the states can apply as well some of the requirements are that the USDA will regulate the importation of all seeds for planting up to this point in time for both marijuana and hemp them seeds that that growers get are from mostly Canada in Europe but they can be from anywhere we don't usually have a lot of them here so that's one of the things the USDA wants to regulate it also will allow interstate transportation in shipment of hemp inside the US domestically but it doesn't affect any exportation and again the states and the Indian tribes can submit a request to the USDA if they want to create and run a program and that link on your slide I know I'm repeating myself sorry but if you have the PDF if you click that it's going to show you a website website that lists all the federal federally recognized tribes that have approved hemp programs it's going to list the states and it's going to show you whether they have a program whether they're still operating under the 2014 Farm Bill and then they're going to give you a link to a PDF that gives you all the requirements and and and details that the state have imposed for their programs next slide please so coverage programs and coverage levels for crop insurance include multi-peril crop insurance which is your M PCI and that's covered against loss of yield because of insurable causes a loss for hemp grown for fiber grain or CBD oil they also offer M PCI catastrophic coverage to be eligible to grow has to have a license to grow hemp and comply with all applicable state tribal and federal regulations under the 2018 farm bill or as authorized under the 2014 farm bill reporting requirements for THC testing and this is really important require growers to provide notice to their insurance companies within 72 hours of notification by the government stating the results of the THC testing for the acreage or the harvested production so how it's gonna work with crop insurance under their final rule is when you harvest or before you harvest a crop it has to be tested and the test has to go to certain approved laboratories and they're going to determine what the THC level is and that was one of the big questions that were asked right after the farm bill was was enacted it's like alright I get these seeds they're approved from the USDA I grow this crop everything's going fine we harvest it and what if the THC level is higher than the federal threshold what happens then do I have to destroy my crop if I destroy my crop or have to destroy it is it a covered loss well no it isn't okay because if hemp has THC levels above
that point three percent it is not a covered insurance cause a loss if it has to be destroyed because it violates federal law so it's going to render the hemp production to be ineligible for payment of a crop indemnity in addition hemp can't be planted in the same acreage as any of certain crops that were planted in the same acreage the previous year they include cannabis canola dry peas mustard rapeseed sunflowers and here in the northern states soybean if you'll advance the next slide we're gonna talk about cannabis and banking this is one of the I think the biggest issues the most contentious issue and I think this is part of why we haven't seen a lot of laws get passed which we're starting to talk about the safe banking Act passed in the house it's still sitting in the Senate and let me give you some examples okay about why people in the cannabis industry day that the federal banking laws need to change recently there was a small legal cannabis business that received a twenty thousand dollar payment after submitting an insurance claim for theft and property damage the owners couldn't find a bank to cash the check eventually they did locate a credit union that agreed to cash the check and they said oh wow this is great however there were conditions and the first condition is that they had to open a bank account and the second was that they had to agree to pay minimum monthly fees that ranged between a thousand and forty five hundred dollars okay monthly fees between a thousand and forty five hundred dollars depending upon the amounts of their transactions so this is what's happening okay the cannabis businesses can open bank accounts they receive money it's all cash they have cash on hand all the time they can only pay their bills in cash because I mean I guess they could take the cash and go to the bank and and get out traveler's check but no they can't do that either because once the bank knows that they're a cannabis business there's issues and I'll talk about them in just a minute if you'll advance to the next slide please so in addition to including provisions for pandemic stimulus but not stimulus to cannabis businesses for relief funds the heroes Act includes provisions relating to the cannabis industry and from the safe Banking Act and this is a really recent law it prohibits insurance companies including their officers directors and employees from being held liable under federal law for conducting business with a legal cannabis related entity or service provider we see that in the safe Banking Act we also saw the same provision that says proceeds from a legal cannabis related business or service provider is not proceeds of an unlawful activity now again according to a recent article in Forbes and if you go to u.s. gov track a lot of people are saying that these bills are not going to pass and and the important thing to realize is that the federally regulated banks don't want to get themselves into trouble under ten money-laundering statutes next slide please the more act is other legislation and its purpose is to decriminalize marijuana everywhere by taking it out of Schedule one I figure if we could take it out of schedule 1 then we resolve a lot of these issues between the federal government and the states they also want to expunge any criminal convictions that either are current or that were issued previously for for people involving involving the the use or possession or sale of cannabis they want to have a tax on it same way they do with cigarettes and liquor and again this is another one of those bills that is not viewed as likely to be passed now the thing to remember is that the the federal banks have to report certain transactions to the federal government and if they don't report them they they can be put out of operation local banks county banks are doing business with some of the cannabis businesses I was teaching in the Midwest last summer to crop insurance agents and of people in Iowa and Minnesota and Illinois were telling me that they've got credit unions in the state that are sticking their necks out and they they're they're doing banking with some of these businesses so you might find that some of the businesses can find a banker but not all of them can and they certainly can't find it in in some of the some of the the larger states next slide please so let's talk about some of the legal issues for example in California okay cannabis has been legal there for two years fully legal but only 25 percent of the cities and towns in this state allow marijuana to be sold legally so in that state illegal sales outnumber legal sales nearly three to one illegal businesses in California are operating online from storefronts and as delivery services they're also advertising now in other states you're not seeing issues this serious because legal retailers are able to meet the need they're able to meet the demand but if the demand for marijuana exceeds the ability of legal cannabis businesses to respond to it that's where we're seeing the problem we're also seeing some counterfeit products and we're seeing marijuana that's not grown appropriately for example the FDA banned certain pesticides there was a leak there was a court case in California a dispensary was sued someone purchased some edibles from it person got sick they went to the hospital they did some testing and they found that the marijuana was grown and cultivated with an FDA banned pesticide so again we've got all different kinds of issues about what happens in the black-market we see counterfeit products and and we're hearing a lot about vaping and how vaping is worse for you if there is THC in the in the liquid and according to what I found is in vaping vitamin E is is often one of the additives that you see in the in the liquids and if vitamin E is included in an edible or it's in it's an ingredient in a sab or a lotion that you put on the skin it's usually not harmful however vitamin E acetate which is the version of vitamin E put into the vaping liquids with THC if you inhale it it can interfere with the way your lungs perform they interferes with the normal functioning of the lungs and if you go to the CDC website there's all kinds of growing alarm and numbers of people who have been admitted to the hospital have had serious health condition and it's because that vitamin E is the additive combined with THC there's something about that combination so again the less regulation we have it appears the more problems we see with the black-market the counterfeiting and all the other issues next slide once upon a time the state liquor liability and dram shop laws were completely different from the drug impaired driving and and didn't involve marijuana and now we're seeing and I'm kind of personally I'm kind of surprised by but we're seeing states that want to include marijuana in their state's liquor laws so this now is obviously going to affect people who sell auto insurance in addition to people in the cannabis industry all right so right now all the states agree that a person is impaired by alcohol if a person has a blood alcohol content of 0.08 or higher and all the states other than Utah consider that a crime whether it be a misdemeanor or a felony I know here in Massachusetts your very first DUI conviction is a felony when I lived in Montana your fourth DUI conviction was a felony the first three were misdemeanor traffic violations so again there's a huge difference in how the states handle that now some states have actually as I mentioned I invoked drug impaired driving laws 12 states have zero-tolerance policy for any amount of THC in the body so if you're stopped and and arrest it or test it and you have any THC any amount you have broken the law there are six states that have a per se law which makes it illegal to have limits of THC in the body that exceed a stated amount so the state determines what that threshold is Colorado has a permissible inference law which means the THC level in the body body's blood is assumed to be excessive if it's more than five milliliters you know in some states it's one some states it's two some states it's five in the remaining states driver has to be under the influence of are affected by THC to be guilty of drug impaired driving so again we're seeing the states passed these laws doing all kinds of different testing and and responses when someone is arrested and if you click the link in your PDF the governor Highway Safety Administration has the laws or links to the states and I think that when you click that link it's going to take you to the Marijuana Policy Project and that's the folks that are providing those statistics next slide please and actually you can do stew of them real quick because we're gonna talk about insurance availability now cannabis risks are businesses so they have the same risks every business has you know I mean there's certain risks that the majority of businesses all have in common but they have additional risks that make insuring them that much more complicated and unless you understand some of these risks you might not understand the kind of insurance that they need underwriting is very very strict for cannabis businesses if a business grows marijuana and they do it indoors they have to have specific types of lights ventilation and standards for their greenhouses every cannabis business whether they're a grower or a dispensary or they're selling edibles has to have strict security and security is going to be related to cash if they're insuring it locked safes locked display with and and a lot of these policies and the underwriting guidelines actually include warranties which I'll talk about a little later on and it's funny you talk to kids they think oh my god I bet you people break into these marijuana businesses all the time to steal the plants it's like no the plant is an annual so when you have a mature plant it's mostly useful life is almost over actually the cuttings and the seeds are more valuable it if you're gonna apply a dollar amount to it then the mature plant because you can take the seeds and you can take the cuttings and you more planets so again it's tough trying to value the inventory okay or the stock or whatever you want to call it because of the different the different ways to value them and the different kinds of plants you know and if somebody wants to grow some plants for the oils you know some they may be having hemp or other plants that maybe have more than the the hem threshold but less than the threshold that's optimum for marijuana you have those issues and again the the manufacturing for human consumption a lot of people don't realize that if you want to make a personal a personal product or food the Department of Health needs to be involved I once had a client a woman who wanted to make soaps and lotions and and she wanted to you know she came to me and we got insurance for her business and then she told me she was doing that I said we'll wait we'll hold on you know your product liability coverage is not going to cover that unless we talk to the insurance company and and you meet certain underwriting guidelines and that particular company said they would only even consider doing it if if there were certain requirements that were met in connection with city and state health regulations so again that's one of the things that you want to make sure you're familiar with next slide there's three major business risks that are faced by the cannabis industry and the first one is the people issue there's more jobs than people to apply and fill for them rapid growth a negative perception of the industry limits prospects because of that negative image it's difficult for many businesses to obtain permits to open up shop buy insurance engage in other activities at the end of webinar I'm going to talk about how the kovat pandemic has affected cannabis businesses and and this is one of the areas where it's affected it greatly the evolving nature not only the cannabis industry but their relationships with potential vendors service providers and business partners presents many challenges vaping is a classic example many believe the issues in connection with vaping and THC is more an issue of the vaping industry than the cannabis industry but of course those in the vaping industry don't see it that way and on fortunately the cannabis industry is viewed unfavorably by many so they're just going to be considered guilty but again if it's a vitamin e is an additive to the vaping liquid that works with THC how do you separate the two under federal law financial institutions and that includes all banks and most insurance companies are required to report a suspicious activity report to FinCEN and the IRS if they suspect that a financial transaction relates to illegal activity because federal law considers the use possession manufacture and distribution of marijuana to be illegal the suspicious activity report the SAR and the currency transaction reports the CTRs are required even if state law differs you know so again there are a lot of banks and even the local banks that still don't want to deal with cannabis businesses there's credit card companies that don't want to extend credit to them there's you know nobody wants to give them a loan right so they're you know all these kinds of issues that they're facing that other businesses don't face and so I know people that want it here in Massachusetts where it's legal I know someone you know a family member of a friend had a business for 30 years and he's retired and he and his son have opened up a cannabis business and he thought that because he's been a business owner for all these years he knew all the things that he needed to do well it's been I don't know year and a half and they still don't have their permit to open because every time you turn around there's something different and I think that's what a lot of people find if there's any of you out there who are actively insuring cannabis businesses why don't you send us a message and let us know because later on when we're doing the questions you might be able to to give us some other insights as well next slide please here are three critical risks and I trust I've touched on all of them but I want to go just a little bit deeper and just share some statistics with you in store theft and shoplifting a product an actual theft Akash is huge every single cannabis business deals with this on a daily basis and then there's the in transit theft when they transport product between supplier and retailer if they're making deliveries now which they're doing in the pandemic and of course of cash insider theft actually accounts of the majority effect employees are the top cultures experts say one report said that three percent of Colorado's theft in the cannabis business was perpetrated by employees product tampering is something else work that's on the rise tampering can result not only an injury to customers but it can prevent a business from meeting regulatory requirements it can damage their reputation as is the case in all industries Trust is important but it's really important in the cannabis industry customers are only going to return to a supplier they trust especially with this federal state issue of legality and especially if they live in one state and they go to another state to buy it and they bring it back we see this here in Massachusetts with some of the bordering states and the regulations vary by state the location of the business the type of business is a dispensary is it a grower is it someone who sells edibles one company lost its license to sell in Canada after it was learned that several of its facilities were not compliant with pot growth regulations the company's stock actually dropped more than 25 percent simply after all this information was made public so again things to think about next slide please you wouldn't think that normal business activities would be more more difficult but they are it's really difficult for some businesses to find property to open up a shop tough to get a lease enough to rent tough to buy and if they can the price for the property or the price of the rent is much much higher than it would be somewhere else and another thing that that people don't think about
efore handed the tax consequences illegal businesses are still required by federal law to report the income they earn and pay taxes on it so that federal reporting is going to be different for an illegal business than it would be for a legal business businesses can't claim all the same deductions that that illegal businesses can't the same as legal businesses can and their tax rates can actually be as high as 90% basically under federal law cannabis businesses pay taxes on their gross profit rather than their net income because most deductions aren't allowed and unfortunately cannabis businesses face two distinct and contradictory problems do they want to face they want to risk tax evasion by not reporting their illegal income what do they want to risk criminal prosecution if they do you know so it's kind of a no-win situation and you know they can't do the marketing they can't do the networking outside of they're very closed industry there's all kinds of services and vendors that they can't services they can't provide and vendors they can't do business with because of the regulations and the issues next slide well it was the insurance companies the vast majority of the carrier's writing coverage are surplus lines or not admitted insurers you know a lot of people think oh you can go to Lloyd's they'll you they write everything well they don't write cannabis in the United States they write it in Canada which legalized marijuana in 2018 but because it's not legal here they don't want to touch it so again the demand is growing and especially now in the pandemic it's growing even more and we don't have enough insurance companies to meet the demand and insurance companies are concerned about the banking issue but their biggest biggest reason for not entering the market is because the federal government still considers marijuana illegal and they don't want to they don't just don't want to wrangle with that and the last thing I want to talk about before we move on to the pandemic if you'll advance the slide for me is what coverage is available in by whom according to the biggest brokers in the country who are selling insurance in the cannabis industry consensus on topics that appear on your screen is almost unanimous cyber liability is one of the most important coverages to have especially for businesses that collect information subject to HIPAA so that would be protected health information generally speaking in the general business world 60% of all businesses that suffer a cyber attack close within six months this is even more likely for a cannabis business due to the fact that they don't have the same bankruptcy protections traditional businesses have and because of the federal state law conflicts Employment Practices Liability and crop insurance are tough to get not that they're not available but the cost is high and if you can get coverage the deductibles are also high those are the most common reasons cannabis businesses choose not to get those coverages crime coverage again is available in a lot of cases but it's costly and again the insurance companies impose those stringent requirements and and the warranties so when a cannabis business submits the application typically statements on an application of representations the business owner says yeah I'm making these statements and I'm answering these questions to my best of my knowledge and belief but with the cannabis businesses they want them to make promises so they're there their conditioning coverage on the accuracy of the promise so yes I promise that I'm gonna keep all my seeds locked in a safe unless I'm actually selling them to somebody well and then there's a fire and the seeds were out and somebody I don't know was in the restroom and they didn't realize they were there now the claims not going to be paid so the warranties typically relate the security system saves showcase windows and reporting when it comes to buying higher limits that seems to be one of the bigger issues as well a lot of companies will sell coverage for example product liability will sell you 100 300 for product liability but we don't want to sell you a 500 million or a million and if a company does sell the higher limits the premiums are just astronomical one area that some of these brokers have been reporting pricing coming down as workers comp especially for businesses that have been in operation for two or more years carriers obviously are working with them to control their losses and they're actually seeing experienced mods that are less than 100 so I guess that's good news the most expensive coverages are in the management liability realm specifically directors and officers employment practices you know and commercial auto is is the price is getting pretty high with that as well if you'll advance again the next two slides pretty quickly let's talk about the Cannabis now in in in light of the pandemic and covin a bunch of the states that have legalized marijuana to one extent or another have stated that marijuana dispensaries are essential businesses during the pandemic so the increase in deliveries and online orders along with along with businesses offering curbside pickup presents even more challenges for the already volatile insurance risks faced by the industry let me see I've got a question here are there obvious technology needs for the cannabis industry that aren't being met um I I think I think there might be again there are certain vendors you know if you if let's say if you want a system some kind of technology system or computer system or any of that other stuff if you can't pay cash for it you know how are you gonna get financing for it so I've heard I've heard that that there's certain issue and again with the cyber even if you have all the systems how are you gonna get coverage for it because either either cyber isn't available or the pricing is just just crazy so I hope that answers your question if not let me know during the pandemic we've seen the demand for marijuana and marijuana products climb and even before the pandemic we soared because the the industry grew by more than 50 by almost 50 percent in 2019 over 2018 and the past couple of months as a result of the booming business dispensaries are now keeping their customers personal information on hand which they may not have done before you know before someone would go in person to the dispensary to buy marijuana and they wouldn't leave their personal information now though they can't you know so they might be paying by credit card they might be paying by cash we are seeing a lot more people claiming that they need medical marijuana instead of recreational marijuana they're getting prescriptions written for them so we have those issues so again you know the cyber risk and a lot of the other risks were high before and many of them are even more another thing we've seen there's a lot of more lawsuits for violating telemarketing laws under the telephone Consumer Protection Act in the past couple months because the marijuana businesses are you know they're out there drumming up business just like any other business would do next slide let's see okay let's talk about veterans because veterans and their benefits are regulated by the federal government and a lot of veterans have prescriptions for medical marijuana and if a veteran uses marijuana that in and of itself inherently does not violate the terms of their VA benefits it won't invalidate their benefits however VA clinicians can't recommend or prescribe marijuana they can't complete paperwork to help veterans apply to participate in legal state marijuana programs VA pharmacies can't fill prescriptions for marijuana the VA won't pay for any marijuana prescriptions even for medical use and any VA grounds medical centers and locations prohibit the use or possession of marijuana at their sites so we're seeing some issues in that regard as well I don't know if any of you insure any veterans homes or nursing homes but you know there's issues with that medical use like I said is increasing as recreational users can't go visit the dispensaries can't cross state lines I live in Massachusetts in Rhode Island there was a pointer the pandemic where if you drove out of Rhode Island into Massachusetts went shopping and came back you had a quarantine for 14 days so again the different the different states impose different requirements but pretty much what I've been hearing is that cannabis businesses that have been deemed essential in their states are thriving because they have all these jobs available and where before they didn't have enough people to fill them now with all the people being unemployed they they are let's see there's a question to cannabis businesses pay their employees in cash how do you handle it that's that's one of the problems and that again is another problem yeah they have to pay them in cash you know because unless again unless they're one of the businesses that has that's doing business with with a local bank if you want to advance to the last slide please because the cannabis industry is largely social and dependent on social interaction we've only seen the tip of the whoops back one thank you we've only seen the tip of the iceberg with respect to changes the legal cannabis industry has realized as a result of the pandemic and sheltering in place orders some experts say the effects will be significant in a negative way especially for smaller businesses and especially since the cannabis industry is not eligible for federal stimulus relief others view the effects is positive many of the states again consider dispensaries and other cannabis related businesses essential so anyone that either has been operating with similar business models or has changed their business models to conduct more deliveries more online sales more curbside services will actually probably see an increase in revenue most agree that moving forward the majority of cannabis businesses are going to be doing that and there are other experts who say that the pandemic has proven the difference between medical and recreational needs is now virtually non-existent that ends my presentation are there any other questions anybody want to say okay let's see for medical marijuana what is the position of workers compensation insures with regard to covering the prescriptions I think some states require coverage yeah that's gonna vary by the state you know again that's why I gave you that that resource where you can go to the states and see how they're handling it that is definitely going to be a state issue and again you know like in Massachusetts if a doctor prescribes it you can get it it doesn't matter if it's work on power or health insurance so I mean I know people who you know their health insurance is paying for their regular prescriptions PTSD you know and and that kind of stuff any other questions no well if nothing's coming in leave it to Linda the consummate professional to finish right on time for questions pacing it perfectly so thank you I'm usually the timekeeper and I didn't have to jump in at all so thank you so much this webinar did look for everyone who is still on this webinar has been recorded will be posted to the silo foundation YouTube channel in the next 30 days or so you can also get a copy of the PowerPoint as Linda mentioned either from Linda directly or from solid foundation we provide these webinars free of charge it's part of our mission and outreach so if you learned something of value today please consider a personal or corporate donation to the foundation we really do rely on donations to keep these webinars going you'll be receiving a post webinar survey so be sure to fill that out and provide your candid feedback to help us improve and plan to join us next month when we will feature Tony kenya's who's the author of ensuring tomorrow engaging Millennials in the insurance industry and he'll be talking about recruiting and retaining new talent in financial services thank you again Linda and thank you all of our attendees for joining us thank you I really appreciate it everyone have a they stay safe
