Florida Cannabis Operators Still Recovering From Hurricane Ian, Are Insurance Companies Helping?

Medical marijuana businesses took a hit when Hurricane Ian tore through the Sunshine State. Many are still picking up the pieces. Some are seeking insurance options to help recover from the costly physical and financial damage. 

"Property-insurance claims, business interruption coverage, and coverage for extra expenses – such as backup generators, cleanup equipment, or facility rentals – should be available to most state operators," experts told MJBizDaily. "Moreover, operators whose cultivation operations were damaged can purchase products on a wholesale basis, if needed."

Cannabis Insurance Providers: How Helpful Are They?

According to Michael Sampson, a Pittsburgh-based attorney who specializes in insurance issues for marijuana companies said "cannabis operators should expect pushback from their insurance providers."

Estimates place the damage caused by the Hurricane at more than $70 billion. Republican Sen. Marco Rubio is requesting a $33 billion emergency federal aid package.

Dozens of cannabis businesses are still closed or are working limited hours and are expected to face steeper premiums and fewer insurance options.

Sampson, a partner at Leech Tishman, recommends a number of steps cannabis companies should take such as:

• Review property insurance coverage, particularly how damages and payments are calculated.
• Provide prompt notice to insurance providers and adhere to other contractual notice requirements.
• Keep detailed financial records and provide visual evidence documenting property damage, inventory/product losses, and income losses.

If an insurance company denies a claim, Sampson urges policyholders to fight back and seek legal counsel.

“Insurance companies are banking on policyholders taking no for an answer,” Sampson said. “It’s really important that policyholders stand up for themselves and make sure they get the full benefit of the coverage they purchased and expected.”

A Possible Option

An option for cannabis growers and dispensaries to recoup product losses is to prove a "failure of crop," defined by the state as a catastrophic crop loss, which poses a substantial risk of severely impacting their ability “to supply patients with low-THC or medical cannabis products.”

Florida is a vertically integrated model meaning that it “essentially requires companies to handle all aspects of the business, from cultivation to retail sales,” which nullifies wholesale agreements.

Nevertheless, a harvest failure triggers an exception to the rule.

Therefore, companies can establish a product supply agreement with another operator, allowing the affected business to buy wholesale marijuana.

Photo: Courtesy Of CityofStPete on Flickr