No business should operate without insurance, especially a business in which the owners have invested a lot of money. Bad things happen in business no matter how careful people are. All businesses need appropriate insurance first to pay the legal cost to defend a lawsuit and second to pay the amount of a judgment or settlement.
All Arizona medical marijuana dispensaries need appropriate commercial insurance for all of their activities. I feared that perhaps the industry might not be able to buy insurance because the business involves the possession and sale of marijuana, a substance that is illegal to possess and sell under federal law.
Fortunately my fear is unfounded. My long-time good friend Dan Ellington, a commercial insurance agent with BBVA Compass Insurance in Phoenix, tells me that he and his firm are able to advise prospective Arizona medical marijuana dispensaries and dispensaries with licenses on the types of commercial insurance needed and the coverage amounts and purchase the desired insurance for the dispensaries.
Hee are a few of Dan Ellington’s comments to me about insuring an Arizona medical marijuana dispensary:
- Insurance coverage can be obtained for professional liability associated with dispensing.
- Insurance coverage can be obtained for general liability associated with the dispensing location.
- Coverage cannot exceed what is allowed under Arizona law.
- Products / completed operations can be insured only if the marijuana sold by the dispensary is grown by the dispensary.
- Products-stand alone coverage may be offered under products line of business.
- If the dispensary or cultivation site has armed security, the insurer considers the insured to have a very high hazard situation.
- Coverage will be denied if the insured does not comply with all applicable laws, statutes, regulations, ordinances and other federal, state and local restrictions governing the dispensing of medical marijuana.
- Minimum policy premium $2,750
- Maximum limits: $1 million per claim; $3 million aggregate.
- Minimum deductible: $2,500.
For more information about insuring your dispensary or to purchase insurance for your dispensary, call Dan Ellington at 602-956-7800. BBVA Compass Insurance is located at 2002 East Osborn Road, Phoenix, AZ 85016.