The Value-Added Insurance Agent

What should MMJ entrepreneurs expect from their insurance agent? Besides providing the correct coverages for one’s business, a dedicated insurance professional can deliver other services that support your goal of obtaining an ADHS dispensary license.

For example: to help prospective dispensary owners finalize their applications, agents can provide them with quotes for all pieces of the business: General Liability, Professional Liability, Property (to include Crop Coverage), Business Auto, Directors & Officers coverage for your Board, Med Mal and Workers Compensation for your staff. Doing so will make your application that much more appealing to ADHS.

Another advantage of working with your agent, especially right now, is that fine-tuning your building layout and operational plans will help you to realize all available premium discounts for meeting the safety and security criteria insurance carriers have.

Your agent can also help you win a Special or Conditional Use Permit by writing a letter in support of your zoning request to the city or county you want to locate in; a personal appearance on your behalf is even better.

My experience has been that those in advisory or decision-making positions find it compelling when a risk-management professional testifies that MMJ businesses pose no more threat to the community than pharmacies, jewelry stores or even the local Circle K.

One issue often overlooked is the effect an MMJ business will have on the landlord; many of their current “Lessor’s Risk” policies will be canceled by mainstream (“preferred” or “admitted”) carriers when a medical marijuana use begins operations in their building.  Your agent should be on top of this so that you don’t end up paying for a big premium increase to your landlord’s policy.

Correctly insuring your dispensary, grow, delivery service or testing lab demands knowledge of the MMJ industry, because Medical Marijuana surely ain’t tiddly-winks.  Find an agent that knows the business, has their ear to the ground and offers value-added service to get the most from your partnership.

Doug Banfelder is a Commercial Insurance Specialist.  He can be reached  at www.PremierDispensaryInsurance.com or by calling 480-315-9051

By | 2012-08-18T09:26:34+00:00 May 18th, 2011|Dispensary Insurance, Stories & Articles|Comments Off on The Value-Added Insurance Agent

Insuring Your Medical Director

According to ADHS Director Will Humble, the most important name in your application will be that of the medical director.  This is because  Mr. Humble sees the long-term success of Prop 203 depending more upon the actions of the medical community than any other factor.

With those thoughts in mind, choosing the right medical director becomes of paramount importance.  Unfortunately, however, the ADHS mandate that the director be “available” during dispensary business hours complicates the hiring process by considerably shrinking the available talent pool.

Another issue impacting the hiring process is medical malpractice insurance.  Doctors with current practices already have policies, including those working part-time.  Those willing to come out of retirement to serve a dispensary or disensaries only need coverage for the limited services they will be providing.

Fortunately there are flexible, cost-effective options.  For those with active practices there is no need to completely change policies – instead, separate, MMJ specific policies can be obtained that essentially supplement the coverage they already have.  The same goes for the semi-retired.

Retired doctors coming back to work can find medical malpractice policies that cover just the activities they list on the application.  In all cases the premium costs are quite modest.

Don’t let concerns about obtaining reasonably-priced medical malpractice insurance keep you from finding the doctor or doctors you need to make your application shine with ADHS.

For further information or to receive a quote, I can be reached at www.PremierDispensaryInsurance.com

 

By | 2012-08-18T09:25:16+00:00 May 15th, 2011|Dispensary Insurance, Medical Directors|Comments Off on Insuring Your Medical Director

An Insider’s View – Three California Dispensaries

Last Sunday I joined a group of Arizona MMJ industry folks who had the rare privilege of visiting three L.A. area dispensaries. It was an excellent study in contrasts.

Our first stop was The Farmacy, a tidy and tiny (850 sq ft) storefront shop laid out in conventional fashion on the edge of the UCLA campus. Large windows with nice displays, good interior lighting, a long counter and fully stocked glass showcases set the tone.

This shop does a brisk business in a variety of herbal remedies, effectively broadening it’s revenue base.  A lack of seating discourages lingering before or after the sale.  A lone, contracted security guard keeps a watchful eye. Unarmed except for pepper spray, he said he can most often talk the occasional bad actor out of aggressive or other unlawful behavior.  All in all, a nice, everyday retail environment, with the only unusual element, at least to we ‘Zonies, being the many small jars of MMJ bud on display behind the counter.

Our next stop was The Herbal Caregiver, a second-story walkup in a somewhat grittier part of town.

After being buzzed into the stairwell of this converted apartment, patients ascend to the second story and enter a lightly furnished, somewhat funky former living room and do their transactions at the counter, behind which is a video monitor showing the front door and around inside.  Literature and business cards of interest to patients could be found on the coffee table.  The effect was kind of homey, in a college dorm sort of way.

Our last stop was the Rainforest Collective, located in a comfortable neighborhood of mixed business and residential uses.  It features an ambiance all it’s own, with walls covered in a colorful jungle motif and astroturf underfoot.  Furnishings inside the large waiting room consist of a small desk for the receptionist and couches, a tv and space enough for members to congregate before heading out to their weekly volunteer community project.

Again, one had to be let into the building.  After completing the requisite paperwork the receptionist buzzes patients into a small vestible separating the front room from the dispensary itself.  After the first door closes, the budtender opens the second door to allow entry into the dispensary.  Both she and the receptionist wore remote panic buttons, and the store’s manager is certified in security techniques.

If you’ve ever been inside a Trails or similar store, this dispensary would look familiar, with a couple of important differences: first, the jarred buds – at Rainforest collective there are many on display.  We also saw more infused products here than in the other locations.

Interestingly, on the infused products there was very little labeling – mostly just the manufacturer’s logo and perhaps some contact information.  It seems advisable, however, to list all ingredients, nutritional values and doseage information for the patient’s sake, and indeed this is a strict requirement by insurance carriers offering product liability coverage. 

Undoubtedly Arizona dispensaries will share some characteristics with those in California, but with the industry rapidly evolving and our program coming online nearly a decade and a half later, Arizona’s MMJ entrpreneurs can benefit from the many lessons learned by the movement’s original pioneers. 

Many thanks to our dispensary hosts, with special gratitude to guide Bob Calkin – here’s wishing you all much continued success.  For more information about what I learned on this tour, email me at: dougb@PremierDispensaryInsurance.com

By | 2011-05-04T17:17:53+00:00 May 4th, 2011|Dispensary Insurance, Stories & Articles|Comments Off on An Insider’s View – Three California Dispensaries

Good Planning Reduces Risk – and Insurance Costs

Your medical marijuana dispensary, grow site or infused product facility’s design, interior layout and security measures all affect your insurance costs. Reducing risk by incorporating certain safety and security elements into your site plan(s) will create a safer environment for customers and staff while earning you discount credits from underwriters.

The same is true for the operational aspects of your business – for example, how employees are hired and trained can minimize the chances of general and professional liability claims, while customer theft and employee dishonesty losses can be significantly reduced with good policies, procedures, and inventory control practices.  How you bring infused products to market also requires careful consideration.

Following is a list of advisable security measures; while some are required by ADHS, others represent best practices that will make insuring your business easier and more affordable.

Dispensaries

1. Building envelope security

All windows and doors connected to 24 hour centrally-monitored alarm
Bars security film or roll down steel covers on windows
Metal doors
Lighting of parking lot and building
24 hour video surveillance, with video kept a minimum of 30 calendar days
Battery back up system for cameras
Structural and/or operational means to ensure that medicine off-loading is discreet and safe

2. Interior Security

Video cameras at point of sale, with video kept a minimum of 30 calendar days
Battery back up system for cameras
Man trap or other controlled entry (can be done in an aesthetic way)
Multiple panic buttons, easily accessible by staff
Safes and Vaults:
800-2000+ lb safe w/ 1 hour fire rating (in-ground safe better)
Safes under 2000lbs must be bolted to ground for theft coverage
Refrigerated walk-in coolers can qualify as a safe if 1 hour fire rated with well-secured door
Cargo or shipping containers may be acceptable as safes (get prior approval from your agent)
Occupying entire building preferred
Show cases should be of locking type (dispensing machines also good)
Major percentage of medicine must always be kept in a safe in private, locked room
FlashFog or similar security system

Cultivation Sites

1. Building Envelope Security

Same as for Dispensaries, including discreet medicine loading access

2. Interior Security

Multiple panic buttons, easily accessible by staff
24 hour video surveillance capable of identifying any activity occurring in low light conditions, with video kept a minimum of 30 calendar days
Battery back up system for cameras
Letter by Licensed Electrical Contractor stating system is sufficient for load
Back-up system for electrical supply
Automatic Water Shut Off Valve for timer-operated watering systems
Measures to ensure constant temperature
Measures to ensure constant humidity

3. Operational Security

Money handling – methods minimizing cash transactions preferred
Staff – Drug and Background Screened prior to hiring?
Oaksterdam University Graduates preferred – ask your agent
Security Personnel – Employed & Unarmed preferred
Staff and Security: Professional Liability (Errors & Omissions) coverage
Laboratory Testing on 100% of all products
Directors & Officers insurance for Board Members
Trade Association membership may qualify discount – ask your agent

Infused and Manufactured Products

Underwriters assessing Products Liability risks consider:

All products manufactured, sold or distributed
Labels, website text and other marketing material, to include:
Nutritional Facts, Ingredients, and Measurement of THC
Will any vendor repackage, relabel or modify your product?  If so, list all products manufactured by you but sold by another entity.
Who are your top customers?
Is there a written products recall plan?
Any new products to be introduced in the next 12 months?
Can your products be identified from those of your competitors?
Could your products or services be used on or in connection with other products?
Any Hold Harmless Agreements/Warranties/Guarantees with others?
Products tested and labeled to meet government or industry standards?
Do you belong to any industry-product standard organizations?
Do you have a written loss-control program in effect?
Do you have a written quality control procedure?

In short, good risk management lessens the potential for loss to you and your insurer. Consult a MMJ speciality agent now to find out how to obtain discount credits for your business and site plans, increasing everyone’s safety and security while reducing your annual insurance costs.

By | 2011-04-26T06:25:45+00:00 April 25th, 2011|Dispensary Insurance, Stories & Articles|Comments Off on Good Planning Reduces Risk – and Insurance Costs

Medical Malpractice Insurance

Although referring physicians and dispensary medical directors will each play distinct roles in Arizona’s MMJ industry, they nonetheless share similar professional risks regarding their activities.

Both must be physicians – that is, a “doctor of medicine who holds a valid and existing license to practice medicine” (which under current rules include similarly credentialed osteopaths, naturopaths and homeopaths).

The range of activities these professionals will engage in includes but is not limited to: patient assessment – or the creation of rating scales for patient self-assessment; recognizing signs and symptoms for substance abuse (for all substances, or just medical marijuana?  Current draft rules don’t say);  patient caregiver education on potential risks and benefits of the use of medical marijuana for patients under the age of 18;  and, the communication of patient usage and symptoms between medical directors and referring physicians.

These activities all require the assumption of some level of responsibility for patient care, either directly (referring physicians) or by way of dispensary personnel (medical directors).  Physicians serving the MMJ community would be well-served to have a detailed conversation with their insurance agent about the limits of their medical malpractice policies before beginning to practice in this new arena.

By | 2011-03-10T07:16:27+00:00 March 9th, 2011|Dispensary Insurance, Stories & Articles|Comments Off on Medical Malpractice Insurance

Insuring Arizona Medical Marijuana Dispensary Business Buildings for Property and Liability

Developing your business plan in anticipation of filing an application with Arizona Department of Health Services ? If so, you’re likely scrambling to find the perfect location(s) for your new Arizona medical marijuana business.  Whether you’re seeking a storefront or a warehouse, there are three things about insuring building(s) for dispensaries, grows or other medical marijuana business uses you should know going in:

  • “Admitted carriers” such as Progressive or Farmers will not insure medical marijuana businesses – period. They have made a business decision to not serve specialty markets.
  • A few other carriers might insure your leased or owned buildings, depending upon the specific circumstances. They are willing to take on more risk, but the medical marijuana industry is not their specialty.
  • Comprehensive coverage for your medical marijuana business, written with A-rated carriers, IS available from agents and insurers who have made a commitment to the medical marijuana industry.

Let’s keep these few facts in mind as we discuss the best way to protect yourself and your future business through the uncertainties of the current pre-DHS application period.

Getting Into the Building

Many landlords require proof of property and liability insurance before giving their new tenants access to the building. This is prudent, and generally required under the terms of the building owner’s “lessor’s risk” policy.

Your future landlord needs to know that claims against that policy resulting from MEDICAL MARIJUANA business activities aren’t likely to pay out, however, as suggested in the first bullet point. While it’s their responsibility to discuss any tenant changes with their agent, I always advise my clients to bring the topic up so that everyone is on the same page, helping all parties to avoid any nasty surprises later.

Insuring Appropriately Now While Planning for Later

While waiting to find out if you’ll receive a dispensary license from DHS, you need only insure yourself against liability, any damage to your newly leased property and loss or damage to property you may have in the building. Simply put, basic coverage is sufficient for this stage.

Many carriers will write a policy for empty office or warehouse space, but offer only a one year term – and given that it will be just a few months before you receive your dispensary license (or not) this doesn’t make a whole lot of sense, especially as they will charge you a short-rate penalty for cancelling before the end of the term.

A better approach is to obtain your basic policy now from a carrier that won’t penalize you later, when you’re ready to begin insuring your new MEDICAL MARIJUANA operation with industry-specific coverage. You can either get a basic six-month policy that can be “flipped” to another carrier (under the same parent company) to one that specifically includes coverage for MEDICAL MARIJUANA businesses, or get a pared down policy from a company specializing in MEDICAL MARIJUANA policies and simply add additional coverage as needed. Either approach will help you to avoid unnecessary penalties or fees while ensuring that your new venture is appropriately covered.

Such flexibility in coverage costs a bit more, but provides several significant benefits – no risk of denied claims due to undeclared MEDICAL MARIJUANA operations, eliminating the danger of coverage gaps or lapses, and simplying the whole insurance process – all far outweigh the small additional costs.

The majority of carriers serve the majority of the market. If your business is out of the ordinary, however, your insurance needs likely are as well. Specialty brokers meet those needs.

Doug Banfelder is a Commercial Insurance Specialist.  Reach him to insure your Arizona medical marijuana dispensary at 480-315-9051 or www.PremierDispensaryInsurance.com

By | 2011-10-02T18:14:18+00:00 February 9th, 2011|Dispensary Insurance, Dispensary Leases, Stories & Articles|Comments Off on Insuring Arizona Medical Marijuana Dispensary Business Buildings for Property and Liability

Arizona Medical Marijuana Dispensaries Need Commercial Insurance

No business should operate without insurance, especially a business in which the owners have invested a lot of money.  Bad things happen in business no matter how careful people are.  All businesses need appropriate insurance first to pay the legal cost to defend a lawsuit and second to pay the amount of a judgment or settlement.

All Arizona medical marijuana dispensaries need appropriate commercial insurance for all of their activities.  I feared that perhaps the industry might not be able to buy insurance because the business involves the possession and sale of marijuana, a substance that is illegal to possess and sell under federal law.

Fortunately my fear is unfounded.  My long-time good friend Dan Ellington, a commercial insurance agent with BBVA Compass Insurance in Phoenix, tells me that he and his firm are able to advise prospective Arizona medical marijuana dispensaries and dispensaries with licenses on the types of commercial insurance needed and the coverage amounts and purchase the desired insurance for the dispensaries.

Hee are a few of Dan Ellington’s comments to me about insuring an Arizona medical marijuana dispensary:

  • Insurance coverage can be obtained for professional liability associated with dispensing.
  • Insurance coverage can be obtained for general liability associated with the dispensing location.
  • Coverage cannot exceed what is allowed under Arizona law.
  • Products / completed operations can be insured only if the marijuana sold by the dispensary is grown by the dispensary.
  • Products-stand alone coverage may be offered under products line of business.
  • If the dispensary or cultivation site has armed security, the insurer considers the insured to have a very high hazard situation.
  • Coverage will be denied if the insured does not comply with all applicable laws, statutes, regulations, ordinances and other federal, state and local restrictions governing the dispensing of medical marijuana.
  • Minimum policy premium $2,750
  • Maximum limits:  $1 million per claim; $3 million aggregate.
  • Minimum deductible:  $2,500.

For more information about insuring your dispensary or to purchase insurance for your dispensary, call Dan Ellington at 602-956-7800.  BBVA Compass Insurance is located at 2002 East Osborn Road, Phoenix, AZ 85016.

By | 2011-01-29T14:32:18+00:00 January 27th, 2011|Dispensary Insurance, Stories & Articles|Comments Off on Arizona Medical Marijuana Dispensaries Need Commercial Insurance