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Commissioner approves new product liability program for cannabis industry

News: 2018 Press Release

For Release: May 16, 2018
Media Calls Only: 916-492-3566
Email Inquiries: cdipress@insurance.ca.gov

Commissioner approves new product liability program for cannabis industry

SACRAMENTO, Calif. — Insurance Commissioner Dave Jones announced today he has approved a new product liability and product recall program for the cannabis industry in the State of California. This new cannabis insurance policy, offered by Continental Heritage Insurance Company, provides product liability and product recall coverage against claims arising from commercial cannabis activity for licensed businesses in California.

"Whenever anyone shops in, works in, sells products to, or invests in a cannabis business, I want there to be insurance coverage available," said Insurance Commissioner Dave Jones. "Continental Heritage Insurance Company's insurance product is another example of the success we are having in getting more insurance coverage for the cannabis industry. I encourage more insurance companies to follow Continental Heritage's lead and file insurance programs to fill the gaps in coverage for the cannabis industry."

The newly approved program offers coverage to businesses with the following license types: Cultivator, Manufacturer, Distributor, Retail and Medical. Laboratory testing licenses are not eligible for this program.

The core component of this insurance program is the applicant's ability to conduct licensed activities in compliance with California laws and regulations and to produce and sell consistently safe products. The commercial cannabis business is an evolving industry and Continental Heritage will monitor changes, collect data and make appropriate changes as necessary.

Commissioner Jones launched an initiative last year to encourage commercial insurance companies to write insurance to fill coverage gaps for the cannabis industry. As a result of Jones' initiative, the first filing and approval of commercial insurance for the cannabis industry was announced in November of last year, the first surety bond program for the industry, also for Continental Heritage, was announced in February, and the first coverage for commercial landlords for the industry was announced earlier this month.

Earlier today, Commissioner Jones hosted a national webinar titled Weeding through the Unique Insurance Needs of the Cannabis Industry with the National Associate of Insurance Commissioners (NAIC) Center for Insurance Policy and Research (CIPR). Last month, Commissioner Jones renewed his call for insurers to offer insurance products for California's legalized cannabis industry in the wake of published reports that President Trump has abandoned Attorney General Jeff Sessions' policy on federal law enforcement of cannabis. Jones sent a formal letter to California insurers encouraging them to fill insurance gaps for California's cannabis businesses.

Jones has convened meetings between commercial insurance executives and cannabis business owners to educate the insurance industry about the sophistication, professionalism and risk management of the cannabis industry. Jones has also organized tours for insurance executives at cannabis businesses. In October of last year, Jones held a first-in-the-nation public hearing to identify insurance gaps faced by the cannabis industry. Cannabis businesses and insurance industry representatives testified about the limited availability of insurance for cannabis businesses. The hearing revealed that while there is insurance available from surplus lines insurers, coverage is limited in scope and, until the approval announced last November, admitted carriers were not yet writing insurance. Jones also announced that additional department staff time would be allocated to cannabis insurance filings given the critical need for this insurance coverage. 

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Media Notes:



Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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