Foley & Lardner LLP partner Michael Kasdin was interviewed in the Law360 article, “Foley Atty On The State Of Cannabis Insurance,” addressing cannabis insurance challenges and potential federal reforms.
On the unique hurdles facing cannabis companies, Kasdin explained, “The difference here is that you’re dealing with a business that is, at its essence, unable to access anything governed by federal law, including banking and insurance.” He noted that most cannabis businesses must rely on a small pool of excess and surplus lines carriers and “therefore it’s going to increase your premiums.”
Kasdin further observed that carriers are “charging a lot more for a lot less” through strict underwriting requirements, extensive exclusions, and reduced coverage options. He highlighted that property, cyber, and other lines of coverage can be especially difficult to obtain due to the industry’s continued federal restrictions.
Discussing proposed federal reforms, Kasdin emphasized the potential effects of the CLAIM Act and SAFE Banking Act on the insurance marketplace. “Once it becomes legal, we have untold hundreds of billions of dollars of surplus in the United States that can be deployed into this space.” Increased competition, he added, could lead to lower premiums, more tailored cannabis insurance products, and more sophisticated underwriting practices.
Kasdin concluded, “I’m a big believer in competition. I also understand the need for regulation, but I think there’s a happy medium and there’s a lot of real estate between where we are and where we go too far the other way.”
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