If you are interested in obtaining one of Michigan’s five commercial Medical Marijuana licenses, then as part of the application process you will need to demonstrate that you have the financial ability to obtain and maintain adequate premises liability and casualty insurance for its proposed marihuana facility. See MCL § 333.27402(2)(e). What is “adequate” is not otherwise defined by statute, though it may be set for the administrative rules when they are promulgated later this year.
LARA and the Michigan Medical Marijuana Board have the right to set rules when necessary that are related to the administration, implementation, and enforcement of the Michigan Medical Marihuana Act. Some examples of appropriate rules include setting appropriate standards for marijuana facilities and their equipment. In addition, they can establish minimum insurance levels that licensees must meet.
Also, the Medical Marijuana Act specifically requires that you obtain insurance to reimburse someone for bodily injury suffered because of the manufacture, distribution, transportation, or sale of adulterated marijuana or adulterated marijuana-infused product. The insurance must be for at least one hundred thousand ($100,000.00) dollars. However, since obtaining insurance can be difficult considering marijuana remains a “schedule 1” drug, the proof of financial responsibility may be in the form of cash or unencumbered securities or a constant value bond. You are not allowed to cancel your insurance as required unless you give 30 days’ notice to the department, and provide a reasonable and acceptable substitute. See MCL § 333.27408 Proof of financial responsibility.
In the meanwhile, if you are interested in applying for a Michigan Medical Marijuana license, then you may want to review an interesting article that appeared recently in the Michigan Bar Journal. The title of the article Packing Their Parachutes; Advising Clients about Business Insurance Coverages. On page three this is a useful list of the various kinds of business insurance available. Some the areas listed that are particularly applicable to the medical marijuana business include:
General Liability Insurance
- Contractual liability coverage limitations exist.
- Additional insureds not included.
- Broad form notice of occurrence not included.
- Employee benefits legal liability not included.
- Personal and advertising injury exclusions.
- Aggregates per location or project not negotiated.
- No waiver of subrogation negotiated with insurer.
- Designated premises limitations limit coverage.
And:
Crime Insurance
- Third-party employee dishonesty coverage not included in crime policy.
- No cyber extortion coverage included.
- No social engineering coverage included for phishing-type claims.
- Inadequate coverage for claims expenses to prove loss.
This referenced Bar Journal article is not specifically designed to assist anyone in the medical marijuana business, and if you are interested in obtaining a license, then you should consider working with a knowledgeable lawyer and insurance adviser who together can help you design a package of insurance coverages that will protect you and your assets as you begin to grow your business.