Cannabis Landlord Insurance – Help, I’m Being Canceled!

If you own commercial property and are thinking about leasing to a cannabis business, you may run into a shocking problem: your landlord insurance policy might get canceled. Many property owners are finding out the hard way that not all insurance companies are willing to cover buildings leased to cannabis tenants.

Why, you ask? Even though cannabis is legal in many states, it is still illegal at the federal level. This makes many insurance carriers nervous. Insurance companies see cannabis operations as a higher risk. The reasons are because of heavy cash handling, security issues, fire hazards in grow operations, and the potential for theft or product liability claims. Some carriers exclude cannabis from coverage entirely.

So, what does this mean for commercial landlords? If you lease to a dispensary, grower, or processor without the right insurance policy in place, you could be left without protection on your building. Worse, your bank may require proof of coverage. If your insurer cancels, you may be in violation of your loan terms.

There is good news: there are insurance companies that specialize in cannabis landlord insurance coverage. These policies are designed specifically for buildings leased to cannabis businesses. The policies can cover your property against fire, theft, vandalism, and other common risks. They can also include liability protection if someone is injured on your premises.

When shopping for cannabis landlord insurance, it would be wise to keep these points in mind:

• Be honest and upfront with your insurance company about who your tenants are. Many insurance applications ask about the tenants, also. Hiding the fact that you lease to a cannabis business could void your coverage and get you canceled.
• Ask about exclusions – some policies may exclude cannabis inventory or tenant improvements.
• Work with an experienced broker or agency that knows the cannabis insurance market. Not every agent has access to the carriers that write these policies, but we do.

The bottom line and at the end of the day, cannabis tenants can be excellent, long-term renters. But protecting your building investment means making sure you have the right insurance in place. May we suggest you don’t wait until you get that dreaded insurance cancellation notice in the mail? Talk to an insurance professional who understands cannabis coverage, and make sure your property stays protected.

Feel free to reach out to our office at 952-222-8073, and one of our cannabis insurance experts will be happy to assist you.