Growing a successful business in the cannabis industry can be a challenge because your focus is essential in many different areas. Whether it is product, marketing and sales, supply chain and logistics, day-to-day operations, employees, safety and security, and compliance with regulations and insurance. Of course, properly insuring your business is important, recognizing the complex (and mandatory) requirements of each state is critical. In Michigan, the laws and insurance requirements have had a few amendments clarifying what is required.
Michigan licensees are familiar with the insurance requirements under Section 408 of the Medical Marihuana Facilities Licensing Act (MMFLA).This states that an applicant/licensee must provide proof of financial responsibility in an amount not less than $100,000 for liability for “bodily injury” to “lawful users” resulting from the manufacture, distribution, transportation, or sale of “adulterated marihuana.” Each licensee then purchases a Product Liability insurance policy to comply with Section 408 and the issuing insurance carrier completes a the Attestation form, certifying that “no products liability exclusion exists in the liability coverage". (The most recent changes to the insurance requirements were to include "Gram Shop" laws in Michigan and the clarifications outlined in Michigan's Senate Bill (SB) 461 and Public Act (PA) 55.)
Specifically, state law now requires the following:
In addition, a licensee must file an “attestation of compliance” with the requirements of the statute with the Cannabis Regulatory Agency (CRA), on a form approved by the CRA, which is signed by the officer of the licensed insurance company or licensed captive insurance company that issues the policy.
While the legislation may have some unintentional challenges and consequences for Michigan cannabis companies, the purpose of the law is to avoid insurers relying on certain exclusions to deny coverage when a licensee is sued. To the extent a licensee fails to maintain proof of financial responsibility as required under statute, the MRA will immediately suspend the licensee’s license until such proof is provided. A licensee also cannot cancel required liability insurance unless the licensee gives the MRA 30 days’ prior written notice and procures new proof of financial responsibility and delivers that proof to the MRA within 30 days after giving notice.
What should Michigan cannabis licensees do next? Due to the complexity of the both cannabis and the insurance industries, it is best to partner with an insurance agent that specializes in cannabis. The right agent is knowledgeable and experienced in both industries with access to all insurance markets. They can help you secure the necessary coverage with multiple options to choose from. You can learn more about finding the right insurance for your business here.
Whether you are applying for a new license or renewing an existing license, it is wise to review your current insurance policies for accuracy of coverage limits, addresses and to ensure your insurance provider is compliant. In order to prove you compliance, you must submit the correct attestation form showing each location.
Spire America has collaborated with the leading insurers of cannabis businesses to provide a tailored insurance solution. Spire Insurance Solutions is your ‘expert buyer’ of insurance using national resources, which are locally sourced.
Spire Insurance Solutions
3183 Logan Valley Rd
Traverse City, MI 49684
Local: (231) 947-1164
Spire Insurance Solutions
400 Renaissance Ctr Ste 2600
Detroit, MI 48243-1502
Local: (800) 686-8664