Posted on 19 Sep 11
This week we spoke with Susan Preston, president of Professional Program Insurance Brokerage (PPIB), about Medical Marijuana Dispensaries (MMDs) – the emergence of this sector and the insurance program her company offers for this market. Headquartered in Novato, California, PPIB is known for their continued commitment to deliver outside-the-box programs to the insurance industry. PPIB works with specialty brokers who have a unique understanding of a specific niche so that the program manager can respond with a product that addresses the market’s needs. This works well for everyone involved: independent agents, insurance carriers, and PPIB.
Susan founded PPIB in 1993 and from the beginning the company’s focus was in program business. Their objective is and has always been to study and analyze how they can make a difference in a specific market, establishing themselves as a pioneer and leader in the industries they serve.
Annie George (AG): Medical Marijuana Dispensaries (MMDs) have received a lot of attention in the last year or so, with many states legalizing them in one form or another. Please provide us with some background on this industry.
Susan Preston (SP): “MMDs are currently legal in 18 states, but in some of those states there isn’t an active system to support distribution. Some of the 18 states have limited the number of dispensaries, so we anticipate slow growth in those states in terms of the number of businesses. Other states like Arizona and Colorado have implemented very tough guidelines or have limited the number of dispensaries that can open, while New Mexico and New Jersey have state-run programs.
Michigan has been more aggressive on setting up MMDs and has left it up to individual cities to determine how they’re going to enforce the law. For example, the state capital of Lansing has issued a number of permits and required that each dispensary get insurance. California has set the foundations for law but the rules and ordinances are left up to the counties, cities, or even townships.
Some cities see medical marijuana dispensaries as cultivators and even edible manufacturers. Some see MMDs and growers as a new form of income and a means of eliminating some of the crime in their cities, as they can apply taxes and use the revenue to add police officers or even fire fighters.”
AG: Do you see growth in this industry?
SP: “Right now as states implement laws, there are quite a number of dispensaries coming onto the market in terms of insurance buyers. However, this doesn’t necessarily translate into rapid growth due to the discrepancies found within all the laws and the fact that medical marijuana is still illegal in most states. What’s more, I don’t foresee any loosening of the laws on the federal level, but I do think as we go on, more states will look to legalize it. But the transition will be slow.”
AG: “What made you decide to develop this program. What opportunity did you see in this area?
SP: “When we started the project, we considered dispensaries as we saw them as a source of possible insurance business, which is something we always like. We knew that there were cultivators and manufacturers so we focused our efforts and resources to build a program that they might need. In order to do this, we needed to partner with a broker who was more in touch with the industry, so we worked with Mike Aberle of MMD Insurance Services in Sacramento. We provided the background of program management, the ability to go to our carriers, and put a program together. Mike provided the industry-specific information in terms of underwriting guidelines and what this segment needs. He suggested we take a tour of MMDs, labs, and growing facilities, which we spent the day doing. We also went to Oaksterdam University in Oakland, which is one of the premier training centers for the cannabis industry. After we took the tour, we were incredibly impressed by how professional this industry was and, with that newfound respect, we began to aggressively put together a program.
“We began with a program for MMDs, and added crop coverage this year, especially since some states, such as Colorado, now require that most of the product be grown by the dispensary itself. We realized we had to have both programs to offer the industry.
AG: What type of coverages does your program offer?
SP: “For both the dispensary and the indoor crop growers, we cover Property and Liability. On the Property side, we offer coverage similar to a Business Owners Policy (BOP), subject certain conditions. We include theft of inventory, stock, and equipment. In fact, in the case of indoor growers, the equipment is worth more than the inventory or stock. We also offer General Liability for the facility and Liability coverage for landlords.
We also continually consider new endorsements and coverages, as a true program manager would. In late 2010, we launched a Product Liability option for edible manufacturers or people who are making their own brownies, chocolates with cannabis in them. In March, we added a Governmental Action endorsement, which we actually copyrighted as it is unique to our program. This endorsement provides legal expense reimbursement if a dispensary has to defend itself in the event the state, county, or city shuts it down. On occasion the state, county, or city will take action against the MMD or grower, which results in the insured having to spend considerable legal fees to fight the charges.
“We also added a Transit endorsement (for goods stolen or damaged) this year to cover the marijuana being delivered from the growers to the dispensary and, in the case of some states, from the dispensary to home for people carrying MMD cards. We also added a Property enhancement that includes coverage for monies, securities, and equipment breakdown.
“We’re constantly adding unique endorsements to our program to tailor the product based on industry demand, which sets our program apart.”
AG: Has the program been successful for you?
SP: “This program has done very well for us this year. Our business is growing quite well in this segment. We have done with this industry what we have done with every other program we offer: Develop a customized product that is nimble and flexible enough to adapt and expand as industry changes demand. We’ll continue to stay on top of their needs as they evolve.”
PPIB’s program is offered in all 18 states where medical marijuana is legal, and is written with top-rated carriers. For more information, please visit: http://www.maryjane-ins.com, or contact Jennifer (Program Underwriter) at 415.475.4300 or via email at firstname.lastname@example.org. Or, you can contact Susan at 415.475.4300 or via email at email@example.com.