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IBC: How did you get into medical cannabis insurance?
Brody Stonehouse: I went to university for business administration, with a focus on sales management and marketing, and when I graduated, I took a job selling timeshares. I didn’t really like it, so my father, who’s an insurance broker, offered me the opportunity to become a broker at AC&D Insurance. I started as an auto insurance agent in BC and worked my way up to commercial insurance, where I worked as a marketer, producer and sales manager.
Around the time when compassion clubs were becoming popular in Vancouver, I knew some patients who used cannabis for medical purposes, and they knew people who were trying to open some of the early compassion clubs. They wanted to get these businesses started but couldn’t find anyone to insure them. It was at that point that I started to work with different insurers to get basic insurance so these businesses could lease space to operate.
IBC: What were your strategies for growing business?
BS: Early on, I researched other jurisdictions where insurance products for cannabis businesses were more developed, such as in the United States. I contacted brokers and insurers operating in Washington, Colorado, Oregon and California to discuss the products available in these states.
I also looked at industries where coverage needs were similar to the cultivation of cannabis, such as manufacturing and alcohol production, to see what kinds of coverage those businesses needed. From a personal cultivation perspective, I also looked into how to insure homeowners doing medical cannabis cultivation in their homes. So with a homeowner’s policy, I looked at how other seemingly high-risk items, such as wood stoves, were handled by insurers.
IBC: What’s in store for the future of cannabis insurance in Canada?
BS: Because we’ve had the advantage of learning from the development of this segment in states where medical and recreational marijuana is legal, I believe Canadian insurance products will evolve faster. In addition, since medical and recreational marijuana will be federally legal in Canada, unlike in the US where it’s still illegal federally, we will see more acceptance of cannabis as a mainstream business, and thus the market will be more robust. But right now it’s all up to legislation.
Personally, my focus has been mostly on cultivation facilities in British Columbia and Alberta, but I do have some business in Ontario, and I think the issue with Ontario will be that dispensaries will be run publicly by the LCBO. I think that’s a mistake, because private enterprise is able to adapt more quickly to serve consumers’ needs. This approach will also limit the opportunities for brokers in Ontario. From my perspective, Alberta, with its fully privatized approach, is really at the forefront when it comes to the cannabis industry, and it’s where we will see the industry develop based on the needs of the consumer.
IBC: What are the major challenges in this market?
BS: The major challenges in general are the preconceptions and/or misconceptions of insurers about the cannabis industry. Many insurers are still taking a ‘wait and see’ attitude, and the legislative changes are also holding things up because insurers don’t know what the final marketplace will look like. They want someone else to jump in the pool first before they get in. One of the companies that is typically the first in for evolving risks is Lloyd’s, but being in the UK, I don’t think they’re as exposed to the same level of understanding of cannabis as a medical product as we are. In their mind, the jury is still out on whether there are any medical uses for cannabis.
In my experience, the claims you see for cannabis dispensaries are the same claims you see with other businesses: water damage claims, small thefts, etc.. Insurers think there is more risk in insuring cannabis businesses than there actually is. I think the insurance companies that come in early will prosper because they are going to get the market share. It would be great to see some more Lloyd’s syndicates get on board to understand the business and consult with the industry to develop products. I get calls from clients across the country who say they found me online because their broker said no to cannabis insurance, even when there are a lot of MGAs where you can find coverage. Many brokers are just not willing to put in the work to learn about cannabis insurance and help these clients, so they end up coming to me.
