Insurance Issues in the Orange County Marijuana Business

Federal law prohibits transporting marijuana across state lines so that means all cannabis must be cultivated in the state of California, and all distribution and sales must also take place within the state. According to a recent news article from the CBS Evening News, the wildfires that are ravishing the state are also destroying a great deal of medical marijuana and recreational marijuana crops.

These fires are hitting California’s wine country region, which is also the ideal location to cultivate marijuana.  In the years prior to marijuana cultivation to being legal, there were many illicit grow operations, but these days, most of the grow operations are licensed and properly registered. In addition to the more than 8,400 residences that have been destroyed in the deadly wildfires, a large barn was also destroyed.  This massive barn had 40,000 square feet of grow space and was sitting on an acre of land. The barn was a grow operation that employed cutting edge agricultural technology to produce a high quality and high yield crop.

There were many plants that survived the burn, but since they are covered with smoke and other debris, they have lost much of their value.  As our Orange County marijuana business lawyers can explain, while this would be a tragic loss for any business, this is a greater loss to those in the medical marijuana industry.  Since marijuana is still illegal under federal law, insurance companies are prohibited from writing policies for businesses that are engaged in a criminal enterprises. The reason for this is a person or business must have an insurable interest in order to purchase an insurance policy on something or someone.  This is well-settled law that was handed down from the British legal system and is still the law across the United States.

There are many other ways that the federal prohibition on the cultivation, sale and distribution of marijuana negatively effect those in the medical marijuana business.  One of the other ways that medical marijuana business are effected by these federal regulations is that banks are also prohibited from allowing money from the marijuana business from being deposited into any type of financial account.  This also means that when it is tax time for business in California, they must go into the collection office with cash instead of just writing a check like another business.  Tax collection employees have said that the entire office smells like marijuana due do the cash being kept at the dispensaries, distributors, and cultivation centers.

This also means that those in medical marijuana industry, and soon the recreational marijuana industry in Orange County and Los Angeles are targets for robberies since everyone knows they often keep tens if not hundreds of thousands of dollars on hand and any given time. While this is an unfortunate situation in which to be placed when trying to run a legitimate business that is supported by the clear majority of our residents, there are often steps that can be taken to protect the interest in a business, and that is why the best thing a person in the cannabis industry can do is to speak with an experienced attorney as soon as possible.

The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

California Wildfires Destroyed Legal Marijuana Crops, October 23, 2017, By John Blackstone, CBS Evening News

More Blog Entries:

Increase in Accidental Marijuana Poisonings Lead California to Propose Bans on Edible Candies, September 25, 2017, by Cannabis Law Group