Necessity is the mother of invention, they say. I suppose then that it stands to reason, that with the birth of a (quasi) legitimate industry, the need to insure it could not have been far behind.

A friend recently pointed out to me the presence of companies actively soliciting the growers and dispensaries of medical marijuana for all of their insurance needs. These companies say that they are offering coverage from “A” Rated carriers. I wonder who they are. Will they be listing this type of coverage under the services section of their respective websites?

Maybe they meant their carriers were “Ayyyyyyyy” rated, as in “Ayyyyyyyy, we had to be completely stoned to write this policy, dude”.

I can’t imagine the risks associated with growing what is sure to be a lucrative and valuable, not to mention illegal, crop. How is it protected? And how do you insure against a theft where the evidence is surely going to be burned, leaving almost no chance of recovering the goods?

No matter the risk, this appears to be a very official, insurance like process. One of the sites features a “Medical Marijuana Dispensary Supplemental Application”, which asks questions that would be considered typical – if your operation was growing marijuana plants, that is. It asks “is this location occupied as a:    DISPENSARY?    WAREHOUSE?     GROWING OPERATION?” and “ Is there delivery OFF PREMISES?” It also wants to know the potential for losing product to local hooligans when it says, “Please describe the CRIME area of this location?”

That's a fun question. I'd probably answer it with, “Crime is low. Just the sale of pot to fake patients… Oh, scratch that.”

It asks about security, if the employees have guns, and how much “inventory” is on display to customers. My favorite question is, “Does the applicant have a written plan or manual that describes business security procedures, including what to do in the event of robbery or other crime?” I suppose they should have that, but the whole planning thing strikes me as blatantly counter culture to the Aunt Mary buzz crowd.

Even better is the form called the “Growing Operations Supplement”.  It asks the following questions:

Total number of plants at insured location? 

Number of times per year an average plant will be harvested? 

Average wholesale price per lbs of marijuana? 

Average amount of dried finished stock from each plant per harvest?  _____________ ounces.

Your estimated inside sales per year? 

Your estimated outside sales per year? 

Square foot of grow area? 

Do you use flow meters or water timers to prevent flooding?                              

Is the grow located above the ground floor?                                                                   

Does the Applicant's employees visit the site on a daily basis?           

How do you maintain a constant temperature in the facility? 

Is the Applicant or employees armed with any type of weapon at this site?           

Do you utilize security guards at this site?                                                                        

If Yes, are the security guards employees?                                                                       

Has the growing facility been inspected by a licensed electrician who has determined that the power supply of the building is adequate and safe for the power consumption needs of your grow operations?

Now remember, this is insurance for an industry whose primary function, growing marijuana, is still an illegal function in the eyes of the Federal government. In fact, cultivating marijuana is not legal anywhere, even California; where just about anything is legal.

As I think about that, it is a perfect business. Collect the premiums and then deny payment upon loss because the product is illegal, and cannot therefore be legally insured. That makes for a hefty profit margin, I suppose. Still, in the event  that is not the case, it should provide peace of mind for those who are endeavoring to provide a valuable service to their customer base. Those customers can” boot the gong” or “hi the hay” with stress free peace of mind. We are, after all, the insurance industry. We gotcha covered.

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