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Faced with mounting claims for insurance coverage as a result of the novel coronavirus (COVID-19) outbreak, commercial insurers are likely to search for any policy provision that they think will enable them to avoid paying virus-related claims.  One provision that insurers ultimately may invoke in an attempt to deny such claims is the so-called “pollution exclusion” – an exclusion that can be found in both commercial general liability (CGL) insurance policies and property insurance policies.  Policyholders should anticipate such an argument and should not walk away from insurance claims just because of it.  Although the exclusion is often broadly worded, there is generally good reason not to read it to preclude coverage for third-party claims and/or first-party losses involving viruses, including COVID-19.

While the exact language of the pollution exclusion may differ from one policy to another, it typically provides that there is no insurance for “bodily injury” and/or “property damage” that “would not have occurred in whole or in part but for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of ‘pollutants’ at any time.”  Again, while its precise definition can vary among policies, “pollutant” is typically defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.”Continue Reading Pollution exclusion should not preclude coverage for virus-related claims

Experian Data Breach Resolution (Experian) has identified its “top data breach trends of 2020,” and the cannabis industry should take note. In its “Data Breach Industry Forecast 2020,” Experian predicts that “we will see many burgeoning industries, such as cannabis retailers, cryptocurrency entities, and even some environmental organizations targeted for cyberattacks as a result of online activism or ‘hacktivism.’”

In recognition of this risk, cannabis retailers as well as other cannabis-related businesses should – in addition to taking other prudent risk-mitigation steps – ensure that they have procured insurance to protect against potential cyber-related losses and claims. While the cyber-insurance market available to cannabis-related businesses is still rather limited, such businesses generally still can – and should – obtain at least some cyber coverage today.
Continue Reading Are you covered? Cannabis industry must prepare for cyberattacks in 2020

Reviewing philosopher Mark Rowlands’ 2012 work Can Animals Be Moral?, Jessica Pierce wrote in the Notre Dame Philosophical Reviews, “The question, ‘Can animals be moral?’ has suffered the worst kind of philosophical denial: an almost complete lack of interest by ‘serious’ philosophers.”

No longer.  In an effort to apply “general canon[s] of contract interpretation,” the U.S. District Court for the Western District of Pennsylvania – in a recent insurance-coverage opinion of all places – implicitly (if not explicitly) considered this timeless, vexing question and concluded that “[a]nimals do not have conscious agency and are not subject to human law.”

In the honorable pursuit of robust coverage law – really, is there a more noble pursuit? – the court rendered raccoons and their woodland “companions” as nothing more than legal roadkill.  Their demise, however, was not in vain.  The court’s decision serves as a good reminder to all that just because a term used in an insurance policy is not defined does not mean that it is ambiguous.Continue Reading Raccoons as legal roadkill: The Western District of Pennsylvania denies coverage for damage caused by masked bandits

In a historic moment, the U.S. House of Representatives, yesterday, voted 321 to 103 in favor of H.R.1595, the Secure and Fair Enforcement Banking Act of 2019, also known as the “SAFE Banking Act.”  If ultimately enacted into law, this legislation would provide insurers, as well as banks and other institutions, a “safe harbor” to do business with “cannabis-related legitimate businesses” in the United States.

The SAFE Banking Act is intended to “create protections for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses.”  As Politico observed, though, “[t]he cannabis banking bill isn’t just about banks.”  It also affects insurance companies and the insurance market.Continue Reading In historic vote, U.S. House passes SAFE Banking Act; but, what will U.S. Senate do?

Like any business, a business operating in the U.S. cannabis industry needs both first-party and third-party liability insurance.  Unlike other types of businesses, however, a cannabis-related business’ insurance needs may be dictated at least in part by state regulations.  Although not every state that has legalized cannabis for medical and/or adult use has promulgated specific insurance requirements for this industry, a number of states, via their cannabis regulations, have done so.  Accordingly, it is imperative for any cannabis-related business to carefully review the regulations in each jurisdiction in which it does business to ensure that it has obtained all required insurance.
Continue Reading Review state cannabis regulations for insurance requirements

Every policyholder in every industry should make sure that it in fact has obtained insurance covering the actual, specific risks presented by its line of business.

That point is the critical one driven home by the U.S. District Court for the Central District of California in United Specialty Insurance Company v. E-Cig Vapor Emporium, LLC, No. EDCV 18-0002 JGB (SHKx), 2018 WL 5098859 (C.D. Cal. Oct. 15, 2018).  While applicable to any business in any industry, this lesson is particularly valuable to businesses in certain newer industries – such as the vaping, e-cigarette, and cannabis industries – where the market for insurance may be more limited and the coverages offered may be more restrictive.Continue Reading Federal court’s E-Cig decision provides cautionary tale

Federal crop insurance will soon be available for hemp.  The federal Agriculture Improvement Act (H.R. 2) (the Act) – which has been approved by both houses of Congress and is now just awaiting the president’s signature – will amend the Federal Crop Insurance Act, 7 U.S.C. §1501, et seq., so that hemp will be a covered “agricultural commodity.”

Federal crop insurance is available only for certain enumerated agricultural commodities, such as wheat, cotton, flax, and corn.  Historically, cannabis, marijuana, and/or hemp have not been included among those commodities.  That is about to change, at least in part.  The Act, known popularly as the 2018 Farm Bill (the Farm Bill), will amend the definition of “agricultural commodity.”  Pursuant to Section 11119 of the Farm Bill, the term “hemp” will be added into 7 U.S.C. § 1518 (“‘Agricultural commodity’ defined”), right between “native grass” and “aquacultural species.”Continue Reading Federal crop insurance grows: Hemp to be covered

It should go without saying that when a business purchases any insurance policy – including, but not limited to, a commercial general liability (CGL) insurance policy – the business expects the policy to provide coverage for its line of business and the specific risks it faces. Cannabis-related businesses are no different. However, they must be especially vigilant to make sure that what an insurance company gives with “one hand” (the coverage grant), it does not take away with the “other” (an exclusion). Remarkably, marijuana-related exclusions may still be found in CGL and other insurance policies marketed and sold to businesses in the cannabis industry.

To better illustrate the concern, consider the following non-cannabis-related scenario: When purchasing insurance, a swimming pool manufacturer would, of course, want to make sure that its CGL policy will provide coverage in the event that a third-party sues the manufacturer for bodily injury allegedly arising out of the use of one of its swimming pools. Conversely, that manufacturer would not want to purchase a CGL policy that excludes coverage for any bodily injury arising out of the use of its swimming pools. While, in that latter situation, the CGL policy may still provide the manufacturer some coverage for certain, limited types of claims, the policy would not provide the manufacturer coverage for the real risks that it faces — that is, those arising out of the use of its swimming pools. Such coverage, therefore, would essentially be illusory coverage. In other words, it would be basically no coverage at all.Continue Reading CannaBeware: Make sure insurance actually covers the risks your business faces

As part of its “adult-use” marijuana regulations, which are expected to take effect next week, the Commonwealth of Massachusetts will require that “Marijuana Establishments” – which include cultivators, manufacturers, and retailers – procure commercial liability insurance in established amounts. Massachusetts’ new regulations are the most recent reminder that cannabis-related businesses must be aware of state regulations and their insurance requirements.

On March 9, 2018, Massachusetts’ Cannabis Control Commission (the “Commission”) “filed its finalized regulations” intended to govern the Commonwealth’s adult-use marijuana industry with the Commonwealth’s Secretary of State. The “regulations are not yet in effect. … The regulations will become effective when published in the Massachusetts Register.” They “are on track to be published on March 23, 2018.”Continue Reading Final Mass. “adult-use” marijuana regulations require “Marijuana Establishments” to have liability insurance

Purchasing insurance for a cannabusiness can feel like a daunting task, but it does not have to be one.

In addition to grappling with many of the same issues and questions that any business confronts when seeking insurance, a cannabusiness encounters certain additional, unique challenges due to the industry in which it operates. That is no reason to panic, however. And, it is certainly no reason to avoid purchasing insurance.

There are a number of steps that a cannabusiness – or, really, any business – can take to maximize the likelihood that the insurance-procurement process will be smooth and successful. In particular, when purchasing insurance, a cannabusiness should consider the following 10 steps: Continue Reading Ten important steps a cannabusiness should consider when purchasing insurance