Poll suggests that COVID-19 will influence cannabis industry more than others

https%3A%2F%2Fwww.traverseticker.com%2Fnews%2Ffirst-coronavirus-cases-confirmed-in-michigan%2F

Bethan Rose Jenkins, Cannabis News Writer/Editorial

A webinar called “Insuring Cannabis: From the Mechanics to Seeing Through The Weeds” was aired live on April 15. The discussion drew one main conclusion that has since ignited plenty of conversation in the legal weed community: Coronavirus (COVID-19) is likely to impact cannabis more than other industries. 

Hosted by Insurance Journal an online publication that delivers business news updates for the property and casualty insurance market the webinar provided some insights into the cannabis market at this critical point in human history. 

Extending over one hour, the session saw three industry experts deliberate over various facets of the industry. Those who joined the webinar were asked questions regarding the potential implications of the virus outbreak on the economic climate. Based on the results, just one-third of poll respondents believe the cannabis industry will experience the biggest repercussions of COVID-19.

Let’s take a look at some more poll results from the cannabis webinar:

  • Approximately one-fourth of poll respondents believe that the Secure And Fair Enforcement (SAFE) Banking Act of 2019 and the Clarifying Law Around Insurance of Marijuana Act (CLAIM) Act will have the biggest impact on the cannabis industry, since these things would relieve financial woes and simplify insurance transactions amid COVID-19.
  • One-in-five poll respondents say that the coronavirus pandemic could spur on federal cannabis legalization in the U.S.
  • 13 percent of poll respondents said that the COVID-19 crisis would result in more vaporizer bans and related illnesses.
  • Nine percent said that CBD products and the U.S. Food and Drug Administration will be largely impacted by the pandemic.

In addition to the aforementioned views, the majority of poll respondents 82 percent felt that unexpected business delays and financial losses will create the biggest impact on the cannabis industry amid COVID-19. Furthermore, 13 percent said that strict policy exclusions will be a noticeable repercussion of the pandemic, while almost four percent came up with a mixture of claims as to how COVID-19 may leave a lasting effect on the cannabis industry.

Large portion of poll participants were involved with ancillary cannabis businesses 

The panelists from the “Insuring Cannabis: From the Mechanics to Seeing Through The Weeds” webinar were also keen to find out what segment of the cannabis and insurance space respondents were most actively involved in. Based on the results, almost half (46 percent) said that their specialty area was ancillary businesses or services. Approximately 21 percent of respondents specialized in dispensaries/retail stores, whereas 17 percent worked in cultivation, 10 percent in distribution, and five percent in laboratories and testing facilities.  

Separate reports have revealed that many job roles are going unfilled amid the COVID-19 situation; social distancing rules and business closures have made it difficult for employers to conduct the necessary background checks and drug tests when screening potential employees.

Poll panelists concerned about cannabis business interruptions amid COVID-19

According to the panelists who conducted this poll on COVID-19’s impact on the cannabis industry, the most devastating repercussion will be the lack of federal funding. While 92 percent of the American population qualified for the Coronavirus Aid, Relief, and Economic Security (CARES) Act, cannabis business owners were told that they wouldn’t be on the receiving end of a loan. 

Lack of federal funding could make it difficult for cannabis companies to stay afloat during this period, say the panelists, who noted the importance of being frugal with money; most insurance providers aren’t willing to cover the cannabis industry’s economic hit.

“With regard to COVID-19 and business interruption insurance, one thing to be aware of is right now a number of the property carriers the carriers that are offering business interruption insurance in the cannabis space have ceased making those placements for the time being,” said broker and cannabis practice leader for Worldwide Facilities LLC, Norman Ives. “They’ve just frozen those markets waiting for things to settle out before they move forward.”

Insurance providers have been anxiously waiting to see if some legislation would emerge that’d force insurers to cover the costs of business interruption “as there’s been some talk in some of the states,” Ives added.

Another panelist from the “Insuring Cannabis: From the Mechanics to Seeing Through The Weeds” webinar, Jodi Green, says that insurance carriers will likely be reluctant to provide cannabis companies with coverage for losses linked to COVID-19. She advises business owners to seek out insurance providers whose policy terms may grant coverage for COVID-19 losses; even if they don’t serve the cannabis industry.

“Until those things shake out and we really understand how the courts are going to construe the provisions that might be applicable to this virus, I’m sure carriers are going to be hesitant to be issuing any new policies that might involve virus, pandemic-type losses,” said Greene, who is a partner in Nicolaides Fink Thorpe Michaelides Sullivan LLP.

Although the economy has taken a hit since the virus first started proliferating across the U.S., the panelists wrapped up the webinar by saying that insurance professionals ought to be serving the cannabis industry amid COVID-19. 

You can watch the full webinar by visiting the Insurance Journal’s Research and Trends webpage.