A “How To” on Insurance for Marijuana Theft in Transit

These days, marijuana is constantly on the move in states with marijuana legal reform. As a result, marijuana theft in transit is not unusual (see here and here for example). Typically, licensees have to transport marijuana themselves or a licensed distributor does it on their behalf. Some of these companies may carry their own insurance for damage to or theft of marijuana in transit. With profits and costs on the line for a universe of marijuana products new to the shipping industry itself, though, can cannabis companies protect better themselves while their products are in transit? I’ve written before about insurance disputes and other insurance issues in the cannabis industry before (see here), but here’s a “how to” on insurance for marijuana theft in transit.

In most states, licensees are required to secure commercial general liability insurance (CGLI) at certain amounts and by certain types of carriers in order to comply with state licensing laws. CGLI policies may not end up covering any damages for a loss or theft of marijuana products in transit. For that reason, in addition to securing the required CGLI, when compiling a comprehensive coverage program, cannabis companies should consider securing their own cargo-in-transit coverage that is best suited to their particular products and needs.

One of the obvious benefits of securing this coverage independently is that any particular cannabis company knows the applicable limits of liability available for coverage, and the terms and conditions under which coverage may apply. Knowing how much insurance coverage is available for any instance of marijuana theft (or damage), and when that coverage may not be available, should allow marijuana companies to cabin the risk of marijuana theft in transit without having to rely on not only one third party (a distributor), but another one (the distributor’s insurer). On the other hand, independent cargo-in-transit coverage specifically negotiated to suit a company’s needs allows for better business planning and a better understanding of the dollar delta risk at issue.

Many insurance carries underwrite cargo-in-transit coverage that can apply whether a cannabis company is transporting its own product, or utilizing a third party licensed distributor. Cannabis companies can negotiate the terms of that insurance at the underwriting stage and develop more robust protections tailored to the products that they ship. Evaluating the coverage options available in any particular insurance program (or a future one) can allow a policyholder to control its own destiny, at least with respect to any given risk. In the end, that’s not just good business–it’s peace of mind.