Ganja farmers could face insurance hurdles
Local farmers seeking to operate large ganja farms as the country’s push towards developing a medical marijuana industry picks up momentum could find run into a brick wall try to insure their enterprises, according to Peter Levy, president of the Insurance Association of Jamaica.
Levy said that as a matter of course, companies may offer coverage for stock, equipment, tools and crops, which are the usual subjects of insurance coverage in agricultural enterprise.
However, the real difficulty lies with policies that involve overseas reinsurers, mainly those domiciled in the United States, since federal law still treats marijuana as an illegal drug.
“Marijuana is a challenging business because our insurance companies buy reinsurance from international companies, many of which have US operations, and since marijuana remains an illegal drug according to US Federal law, those US companies are reluctant to do this kind of business. Therefore, it may pose some difficulties here to cover that,” he said.
Levy is advising marijuana farmers to get the dialogue going regarding insurance possibilities for their farms.
“Crop insurance is a speciality line that is not as widely available in Jamaica, whether for marijuana or any other agricultural product. I strongly recommend that marijuana farmers and distributors talk to their insurance adviser as early as possible, since getting coverage may require more information and need longer lead times than other businesses,” said Levy, who heads the association that represents life, health and general insurance companies operating in Jamaica.
The insurance guru pointed out that generally, agricultural enterprises are subject to significant inherent risks, including variations in crop yields, drought and flood, and market risks, and this makes having the ability to transfer to an insurance company the risks of accidental physical damage to property very important.
“In addition, access to loans or investor capital may be conditional on having insurance for the crop,” Levy said.
He stated that it would require more research to know whether there is any extra risk inherent in marijuana cultivation.
“Other than that, I expect it would be treated as a standard agricultural risk. This is again subject to reinsurance partners accepting this type of business. In the meantime, we are not aware of special features of marijuana cultivation as opposed to other agricultural enterprises,” said Levy.
Paul Burke, programme director for the Ganja Growers and Producers Association of Jamaica, mentioned that although insuring ganja farms would be useful, getting the coverage is made harder as farmers cannot get into the banking system, coupled with high risks associated with the production.
“The major worries are that we are in a hurricane season, we tend to get long spells of rainfall, worse if the plant is budding. Then there are countless pests such as spider mite ... and other insects. I suspect that it would be very hard to insure,” stated Burke.
He added: “I don’t know any insurance company that would insure ganja farms. And I really don’t know the position in ganja-friendly places like California or Colorado and Washington state in terms of insurance, but it will be really hard getting coverage here”.
One licensed ganja farmer in western Jamaica, who did not want to be identified, agrees that acquiring insurance coverage for the weed industry may prove a difficult undertaking.
“I can’t speak to the across-the-board issues, but we have enquired of some brokers and have gotten a quote from one, which we are now reviewing. Some farmers may feel that they can’t bother with the hassle and take the risk on to themselves; others might not, but I am willing [to seek out insurance],” the farmer said.
When contacted, one officer at an insurance brokerage firm indicated that while the matter has been placed on the table for discussion, the company had not settled on an official stance.
“We depend on the insurance companies to indicate if they will be willing to offer coverage for players in the industry, but so far, we have not been updated on this,” the representative, who spoke on condition of anonymity, said.