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Colorado Springs Independent
December 24, 2009
Pot protection
Insurance agents are the latest to cater to Colorado's budding business by J. Adrian Stanley
While some Colorado lawmakers are instituting moratoriums or redesigning zoning laws to stomp out the burgeoning medical marijuana industry, the business sector sees opportunity. It wants a piece of the pie — or the brownie, as the case may be.
And as businesspeople reach out to dispensaries, something magical is happening: Medical marijuana is starting to look a lot like a business. A real one. Dispensaries are paying taxes, they're following OSHA regulations, and, increasingly, they're buying insurance.
Now, the insurance industry isn't exactly known for its flair for adventure. So when Californian Mike Aberle started thinking that insuring medical marijuana dispensaries and cooperatives would be a swell idea, he didn't rush into his boss' office at Statewide Insurance Services corporation in Rancho Cordova. When he finally did bring up the subject, he was surprised by the response.
A few years later, Aberle's idea has grown into Statewide's Medical Marijuana Dispensary specialty unit, which has a staff of 10 dedicated to tailoring insurance packages for the pot industry. The program, which currently insures about 120 dispensaries, recently branched into Colorado, and has snatched up quite a bit of business, though no Springs dispensaries have signed on so far.
Statewide isn't the only company offering insurance packages to dispensaries, but Cameron Lewis, spokesperson for Colorado's Division of Insurance, says it's hard to track who is.
"Unless they are also marketing it and bringing attention to their concept, there isn't any way we would know," she wrote in an e-mail.
Aberle says dispensary owners are great customers. They're willing to go the extra mile to secure policies, even installing security measures that rival those at most banks. And they're dedicated to keeping claims to a minimum, alleviating concerns that carriers may have about extending their services to an emerging, controversial and — let's face it — federally illegal business.
"Knock on wood," Aberle says, "we have a zero loss ratio with our clients right now."
Statewide's tailored packages usually include general liability, property coverage, crop coverage (for growers), workers compensation, auto insurance (for companies that do deliveries), and product liability.
The packages take into account dispensaries' unique risks. For instance, most small businesses don't buy workers compensation insurance for owners or officers. But dispensaries usually want that coverage, because there's a higher chance of being robbed or assaulted — just as there would be at a bank. However, unlike a bank, dispensaries also have to worry about product rotting, or plants dying due to equipment failure.
"This industry is so specialized," Aberle says. "You really need to know what you're doing."
Done right, Aberle thinks insuring medical marijuana will cultivate more credibility and more acceptance from the public. That last part means a lot to Aberle, who watched his stepmother suffer and finally succumb to ovarian cancer.
She didn't try medical marijuana — partly because of conservative values, but also because she was afraid of how others might judge her if they found out.
"That's how I got into it," Aberle says, "because I saw the compassion side of it."
Kristal Bernert sees lots of people like Aberle's stepmom. Bernert's a Denver attorney and certified public accountant — the person you go to for those major changes in life. Like starting a new business. Or writing a will.
While settling estates for her clients, Bernert would talk to them about how they were weathering the last days of their lives. And many of them, she noticed, were saying the same thing: Thank God for medical marijuana.
"[Pot] helps alleviate pain," she says. "It helps assist people and make them more comfortable."
It was a mix of compassion and legal curiosity that led Bernert to create Denver's Zen Dispensaries, which will open soon. She wanted to be a part of the movement. She wanted to have a say in how laws and regulations are crafted. And she wanted to be yet another dispensary demonstrating that yes, this is a business. And it can be run like one.
So before she opened, she got a sales tax license, installed a security system and signed up for one of Aberle's insurance plans.
"Because [as an attorney] I'm in the practice of starting small businesses, I think insurance is key," she says. "Being an attorney, I see what happens. There's all sorts of things that come up, and it could cost millions of dollars."
Tanya Garduno, a licensed caregiver and grower who also serves as a director with the Colorado Springs Medical Cannabis Council (a group trying to guide City Council on regulating the industry), says she's all for insuring dispensaries, taxing them, and even requiring special licensing, so long as it's practical and fair.
"We're working really hard to be as close to other businesses as possible," she says.
But applying all the normal business practices to medical marijuana may not benefit everyone.
Kevin Jones, who runs Nature's Remedy dispensary out of his home south of the city, says he's trying to follow the rules — he licensed his business and pays taxes. But as a small start-up, he can't afford to install the security he'd like, let alone buy a pricey insurance policy. And until he can move the dispensary into its own retail location as planned, he doubts any insurance company would cover him.
He's probably right, according to Aberle, who says anyone he insures has to have airtight security.
"We're at a crucial time in history when it comes to insurance and medical marijuana dispensaries," Aberle says. "The dispensaries have to look at themselves like a bank from the aspect of being robbed."
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