Takeaways from Our Conversation on Insuring Cannabis Seeds

If you’re looking for a niche within a niche, insuring cannabis seeds be the answer.

The U.S. Drug Enforcement Administration declared in a memo issued in April that cannabis seeds that don’t exceed the .3% THC limit do not fall under the Controlled Substances Act.

The DEA was basically acknowledging that cannabis seeds under that limit are considered hemp under the 2018 Farm Bill, which removed hemp from the definition of marijuana in the Controlled Substances Act.

The DEA’s memo, which the agency called a “clarification,” was well covered and covered excitedly in the media. The big take was that seeds are now legal to buy, sell and transport.

That has personal use implications, but more importantly it promises to open up the lanes of commerce quite a bit.

In fact, there are those who believe the result of the DEA’s memo will lead to what amounts to an entirely new industry within an industry springing up.

For the meaning of all of this to those in the insurance industry, we spoke to Rich Golz for our latest Insuring Cannabis podcast

Golz has become sort of an early adopter-insuring cannabis seed specialist. He is a principal with Symphony Grow, the specialty business of Symphony Risk Solutions. Golz, who previously led the cannabis practice for Aon, is preparing to get more business off the back of this DEA memo.

Following are takeaways from our conversation with Golz.

“Seed breeding and genetics and clone sales have been an enormous part of the cannabis world for decades, as long as cannabis has been around,” Golz said. “But outside of a couple of big examples in California, it’s been really a gray market area to date. And I think this ruling is going to help propel that kind of into the sunlight, so to speak.”

If insuring cannabis is an emerging and underserved industry, insuring seeds is even more underserved.

In fact, Golz expects that before the industry begins offering new products to cover seeds, insurers will look to ensure the policies they have been writing don’t lead to extra risk exposures because of the DEA memo.

“We certainly do see some carriers that are introducing things like Seedsman’s E&O exclusions, basically removing coverage for things like that, the failure to perform, etc.” he said. “But I think at the moment, it’s mostly silent on those issues.”

Golz believes claims will eventually arise from this area, as it does from all sectors. While one compliance concern has been take off the table, compliance will of course, will be a big concern as companies move to take advantage of the new policy.

“The amount of regulations that you’re dealing with, whether they be federal state level, in a contract, in a lease, in your insurance policy. I mean, there are rules and regulations coming at you from a million directions,” he said. “And the likelihood you’re going to be able to comply with all of those is, in my opinion, pretty much nil at the moment.”

He added: “There are some that are more important than others, but I view this move as one, sort of compliance issue now being removed from a cannabis businesses list of things they have to deal with. We can now send our genetics across state lines.”

Related:

• Takeaways from Our Conversation About Next Steps for Insuring Cannabis
• Takeaways from Our Conversation on Cannabis Testing Labs
• Takeaways from Our Conversation on Cannabis Lounges
• Takeaways from Our Conversation with Cannabis Data Chief
• Takeaways from Our Conversation on Cannabis D&O