Michael Hall, Vice President of Cannabis Operations for Golden Bear Insurance, shares insights on the evolving risks and opportunities of insuring a legal cannabis market expected to move more than $134 billion in product by 2030.
Thanks to measures approved by voters in Ohio, Delaware, and Minnesota this year, cannabis is now legal in one form or another in 41 states and counting—creating new opportunities and new risks for P&C insurers. Just ask Michael Hall, Vice President of Cannabis Operations for Stockton, CA-based Golden Bear Insurance.
In 2017, Golden Bear became the first admitted insurer to sell cannabis business insurance in California. That was just a year after the state passed its adult-use law and only a few months before the sale of cannabis from licensed retail outlets became legal.
Founded in 1978 by Hall's grandfather and today run by his father, Golden Bear provides commercial property, casualty, professional liability, and residential insurance in 36 states. But its role at the vanguard of insuring the cannabis market was, shall we say, serendipitous. According to Hall, the company had moved into a new building that came with one of only two cannabis dispensary licenses in the state at the time and subsequently became a landlord to one of those dispensaries. (And to think I was happy to learn our new building came with a conference room projector!)
After learning more about the industry and some well-timed lobbying from the state's Department of Insurance, which legislators had just charged with building an insurance market for cannabis in California, Golden Bear took the plunge. Today, it covers cannabis-related businesses (CRBs), including cultivators, manufacturers, retail dispensaries, warehouse operations, testing labs, and short-term events.
For Golden Bear and other early entrants, the cannabis industry has been downright dope. But in an all-new episode of the InsurTalk podcast series, Hall reports that carriers seeking to jump into the sector had better do their homework.
As recently as 2020, only six insurers were willing to provide coverage to CRBs; there are now well over 30—expanding availability while putting downward pressure on pricing. According to Hall, rates are down as much as 50% in some areas, adding that CRBs also face unique risks. Think theft, vulnerability to wildfire when it comes to crops, and new product liability issues for edibles, plus all the workers' compensation and property hazards faced by any business in agriculture or manufacturing.
Crime is a particular threat. And because cannabis is still a controlled substance at the federal level, access to banking in the sector is limited. As much as 70% of all CRBs remain all-cash operations, posing significant safety and security risks in an industry projected to be valued at $134 billion by decade's end. Yet during our recent interview, Hall makes a compelling case for bullishness about the sector—and offers expert insights on what it takes to succeed in this booming market. Listen now.