LANSING, Mich. (MIRS News) – Those who try to organize cannabis events have been dealing with unclear rules and rising insurance costs. Now, the industry wants regulators to do something.
With insurance costs rising to $10,000 per event and local governments requiring applications be submitted three months before an event starts, the marijuana industry is asking for relief that may only come if and when the feds declassify pot as a Schedule 1 narcotic.
Until then, organizers are required to come up with insurance, a business plan, security plan, and a full application . . . before locals sign off on it.
“Which is putting the cart before the horse. You have to bond your insurance and pay for it just to apply, which I think is crazy. It’s very expensive to even apply for something that may or may not happen,” said Tom Beller, CEO of Real Leaf Solutions, a cannabis event planner and grow operation.
As a result, the risk of even trying to hold a marijuana sampling event is too much.
Spire Insurance Solutions Vice President Tyler Bartosh said special event liability policies usually start around the $200 area, but most companies won’t even quote events where marijuana is mentioned, let alone provided or consumed.
He said premiums start at $2,500 and can top out at $10,000. He said festivals, concerts and large events can be even higher.
“The ‘unknown’ is one of the main reasons for the higher costs,” Bartosh said. “Plus, the disconnect between federal and state laws means that those involved in the industry could put their financials at risk.”
He said every event policy could look different depending on what the event would be focused on, but there are risk managements that can lower cost, such as the type of entertainment, if alcohol would be served, a limit on the amount of cannabis that could be provided or used and the size of the event.
He said it may not be what the cannabis industry would like, but networking events without consumption would be the cheapest to insure.
“Unfortunately, for events that aren’t generating revenue via ticket sales, it is hard for a cannabis company to justify the insurance investment for one event – and we don’t blame them,” Bartosh said.
Dan Doyle, an event organizer and attorney, said the amount companies could lose if the event doesn’t take place is not doable for most businesses.
He said there are a limited number of insurance companies that are willing to provide coverage for the events.
Beller said he had not seen insurance for events sold for less than $6,000.
Jamie Cooper, director of industry and community development for Sensi Magazine, a cannabis media organization, said when events first started people were paying $750 for coverage, but that had gone to $10,000.
“A lot of event organizers feel like there is gouging,” Cooper said.
Another area of contention from the industry that came before the Cannabis Regulatory Agency was the need for rules clarifying samples at festivals or events.
“It’s the best way they can market their products and get them into new hands,” Cooper said.
CRA Executive Director Brian Hanna said the agency would soon be issuing a request for rules changes to go over some of the event issues that were brought up at the quarterly meeting March 9.
Hanna said, in anticipation of opening the cannabis rules, that the current rules were condensed into one document.
He said the group would be asking the industry what it is looking for in the rules changes and would be holding public comment on the new rules set after it is written.
Beller said he wants to see clarification on the way samples could be distributed during events. He said as it stands that the industry can’t call them samples but has to refer to them as promotional materials.
“Sampling right now is only defined for licensees and their employees as far as what the limits are and how you are supposed to handle them internally,” he said.
He said the CRA has certain rules that apply to promotional materials already. For one, they need to be handled by a retail employee, but there is too much “gray area” that the businesses are operating in.
Cooper said she would like to see the 90 day window lowered to 60 days, but 30 days would be better.
Doyle said he would like to see the requirement for paid insurance dropped to fill out the application.
Beller said the ultimate fix for both the insurance and sampling problem would be a minimum of de-listing marijuana by the federal government.
He said the best scenario would be for the federal government to completely legalize cannabis.
He said the industry is still fighting against the federal government to be considered a legitimate business, and until that happens there would be obstacles to the industry. He said it would be nice to be able to offer an IRA to their employees.
“It’s time to just stop the madness because we’re battling. We’re still fighting, it seems like. It would be nice to be treated just like every other business,” he said.