VANCOUVER — The growing medicinal marijuana business in the United States despite the drug's illegal status has many insurance firms seeing green -- as in money.
But north of the 49th, where there is no federal prohibition on medicinal pot, legal growers are green with envy because it's next to impossible to get insurance coverage in Canada.
Sam Mellace, B.C.'s largest licenced medicinal grower, said he had a hard time getting coverage for his 292-plant crop.
"It's been more stressful doing this legally than it is illegally," said Mellace, who finally found coverage from Lloyd's of London, based in the United Kingdom.
"One of the things Health Canada should be doing is insisting that people get insurance.
"Maybe our government should even provide it -- it's either that or they stop sending out licences if people can't get insurance. Because if the house burns down, who's going to pay for it?"
Mellace said he's covered for up to a million dollars in the event of fire or theft but he's in the minority.
"There's very few -- if any -- that have insurance."
When contacted, a spokeswoman for Lloyd's of London said as far as she knows, the company does not specifically sell coverage for legal growers of medicinal marijuana insurance.
Neither do most Canadian companies, according to Lindsay Olson, spokeswoman for the Insurance Bureau of Canada, because most providers in this country view grow ops, either legal or illegal, as a liability rather than an opportunity.
"Some insurers may not wish to insure premises in which marijuana is grown, regardless of whether they are done so legally or not," said Olson.
City officials and police have expressed concerns that residential grow op houses are a potential target for thieves and other criminals, she said, and increasingly vulnerable to fire or water damage.
She said most houses that are involved in grow operations are a pain for insurers because of the extensive damage to the premises as a result of the enterprise: electrical bypasses, mass destruction of the drywall and wiring, and humidity or mould.
"We don't have any experience on the medicinal operations, but certainly on the situations where people have had illegal grow ops, the size of the claim can vary from a few thousand dollars to a total loss of several hundred thousand dollars," said Olson.
"Some of those costs are passed on to consumers and that's not fair."
At present, Olson said government-approved growers could try to get coverage under the standard homeowner policy because they aren't breaking the law. But certain exclusions or limitations would apply.
She said small grow operations of only a few plants would fall under the deductible and would not warrant a payout.
Larger operations, where one grower produced for several people and was paid, would fall under the "commercial enterprise" category and wouldn't fit the personal policy criteria.
It costs a small fortune for the sick to set up their own grows, according to Carl Anderson, a government-approved cultivator who uses the drug to treat his severe migraines. He said it cost him $10,000 to set up a 49-plant grow in a building in Kamloops, B.C.
He was robbed, something RCMP spokesman Cpl. Peter DeVries said can be the inevitable byproduct of growing pot because of the drug's high value on Canadian streets.
Legal grow houses can become the target of organized crime for theft and violence because the drug retails for about $10 a gram.
Anderson said after the robbery, he filed a claim and was compensated, but was dropped by his insurer shortly after.
He said he now grows without insurance because he hasn't been able to find another company to cover him.
Meanwhile, Colorado's "guru of ganja insurance," Greenpoint Insurance, has provided insurance to medicinal growers for the last 15 years in Colorado and nine other states. Medicinal marijuana use is legal in 15 states and Washington D.C.
Businesses like cannabis dispensaries are fully-licenced and well-advertised in Colorado, despite the fact that the drug is still illegal at the federal level.
Greenpoint owner J.B. Woods said his company is one of only six in the world to exclusively sell marijuana insurance to patients and medicinal growers.
"There was just literally a proliferation of medical marijuana businesses," he said. "It was clearly an opportunity."
He said basic coverage costs anywhere from $1,500 to $2,000 a year, whereas "the whole nine yards" that covers product liability can go for $4,000 annually.
A Greenpoint insurance package provides liability protection and product liability protection, so if someone gets sick from the medicinal pot sold at a dispensary, they can get compensation.
Woods said his company also pays out claims when medicine or grow equipment is stolen, and covers crops from seed to harvest.
"We haven't experienced an overabundant amount of claims," he said. "But typically, theft is the No. 1 use of the policy. We just about a month ago paid a $25,000 claim where they stole medicine."
They don't cover home growers, according to Woods, because people are encouraged to grow in warehouses and industrial areas to avoid the dangers of fire and criminal activity that come with growing a crop in a residential neighbourhood. It also covers cannabis dispensary retail stores.
Woods said he's had numerous requests from Canada to expand his services here, but it's not something he's considering.
"We've never pursued that whatsoever just because of the amount of volume down here, and then obviously, having to navigate through Canadian law."
As of February 2011, Health Canada had authorized 8,359 Canadians to possess medicinal marijuana, 4,750 held personal growing licences and 1,529 had been designated to grow for one other person.
The Canadian Press
April 10, 2011
U.S. pot insurance has Canadian growers green with envy