Cannabis Insurance: Is Anyone Offering It?


As of October 2018, cannabis was made legal across Canada and brick and mortar stores in Ontario were approved for opening of April 1 this year…and there may be more stores on the way.

The Ontario government recently announced that they are approving licenses to open an additional 50 cannabis stores across the province. Eight stores have been allocated to operate on First Nations reserves, with the remaining 42 locations to be spread out in the various regions as follows:

  • 7 stores in Eastern Ontario
  • 6 stores for the GTA
  • 13 stores for the City of Toronto
  • 11 stores for Western Ontario
  • One store each for the following cities in Northern Ontario: Kenora, North Bay, Sault Ste. Marie, Thunder Bay and Timmins

A lottery will be conducted by the Alcohol and Gaming Commission of Ontario to determine which applicants will get the licenses to open stores.
Interested parties will be able to submit an expression of interest form online to the AGCO in the summer of 2019.

Prospective retailers must demonstrate that they have secured appropriate retail space that could be used and that they have access to enough capital required to open a cannabis retail store. Licensed retail stores may now be opened in any municipality regardless of population size, granted the municipality did not opt-out of the retail cannabis market.

But the question is can cannabis stores obtain proper insurance coverage, since they are only just starting to emerge as a legitimate business but this doesn’t mean the risks involved with manufacturing and distributing plants have suddenly disappeared.

However, insurers have pointed out that covering Directors and Officers remains a significant challenge in terms of insuring cannabis based businesses. “We’re seeing D&O continuing to be the biggest challenge within the industry. Providing D&O coverage to start-ups, especially publicly traded start-up companies who aren’t significantly established in an industry that is rapidly evolving and changing from a regulatory and capital standpoint, is something that is going to lead to a lot of D&O claims. Most D&O carriers are very reluctant to provide any form of coverage within this sector.”