Insurance market Lloyd’s of London has announced that it will allow its member firms to insure marijuana and cannabis businesses in Canada once the recreational drug is legalized this October.
Lloyd’s of London specializes in complex insurance risks, from offshore oil rigs to soccer players’ legs. In a notice to its insurance company members, UK-based Lloyd’s of London said that after taking legal advice, it was satisfied that providing insurance for marijuana and cannabis businesses in Canada would not breach the British “Proceeds of Crime Act.”
“It is important that managing agents ensure that any cannabis risks have Canadian risk location only,” the statement said.
Recreational sales of marijuana and cannabis are set to begin across Canada on October 17, making it the only Group of Seven nation to fully legalize the recreational drug. Lloyd’s of London said that it “does not intend to prohibit syndicates… from underwriting cannabis-related business in Canada, provided that syndicates themselves ensure all of their activities meet local and international laws.”
The news from Lloyd’s of London, one of the most respected names in the insurance industry, comes as many large insurers, particularly those based in the US, take a pass on insuring marijuana and cannabis businesses.
Marijuana growers in Canada and the US say they are having difficulty getting insurance against crop loss and other business coverage, while distributors and retailers say they can’t get insured against theft and fire, as well as employee liability.
Industry analysts say that the fact marijuana remains illegal at the federal level in the US is keeping big insurers on the sidelines and leaving smaller insurance firms to provide insurance coverage to businesses that deal in marijuana and cannabis products. Most US banks won’t allow marijuana companies to open accounts because of federal restrictions on the drug, and now they’re finding it difficult to buy insurance as well.
Lloyd’s of London is an insurance market that brings together different insurance companies to pool and share risk. In 2017, Lloyd’s of London counted 85 insurance companies as members and they collectively managed £33.6 billion of insurance policies worldwide.
News that Lloyd’s of London has given approval to its insurance company members to insure marijuana and cannabis companies will come as welcome news to growers and distributors throughout Canada.
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