Marijuana businesses, patients struggle to get insurance for damaged plants

Jun 27, 2012

Turns out, you may not have a good claim if your pot plants are stolen, wrecked or confiscated, even though more insurance policies are being offered.

Yesterday a Clarkston, Wash., woman whose medical marijuana was stolen found out she can’t recover the loss under her renter's insurance policy, because no legal value for the drug can be established. Even growers who get specific policies for their crops worry that their insurance will be no good if the feds bust them.

While it may be legal in many states, including Washington, to grow and possess the drug for medical reasons, it is still against the law on the federal level and insurance payments could be construed as aiding and abetting a crime.

Michael Aberle of Statewide Insurance in Sacramento, Calif., told KATU 2 (a Portland, Ore., TV station) in May that his company underwrites between 3,500 to 4,000 marijuana policies right now. He said the industry cannot protect clients against federal raids. If insurance companies reimburse growers for their losses after federal raids, Aberle said, agents and insurance companies could be charged.

The Lewiston Tribune reported today that a judge in Dayton dismissed claims Tuesday against the insurance company that were brought by Thomas and Deborah McDonald of Clarkston. The complainant has a Washington medical marijuana card for treatment of her brain cancer.

Ten plants were stolen from the woman’s home last spring. The couple filed a claim under a section of their insurance that covers trees, shrubs and lawn.

The judge ruled, according to the Tribune, that a person who has property insurance has a lawful interest in medical marijuana when it is possessed in compliance with state law. The court also recognized the time, effort and personal resources that went into the cultivation of the lost plants.

The essential element missing from the claim was a fair-market valuation of the stolen marijuana plants, according to the court documents obtained by the Tribune. Because the sale of pot is still illegal under state law, no legal value for the plants can be determined. The court can find no legal authority that black market value can substitute for fair market value, nor do donations to so-called marijuana dispensaries, the judge said in his ruling.

However, KATU 2 reported, a growing number of growers and grower cooperatives can now buy insurance policies to protect their crops and marijuana inventories against losses. Insurance agent Dan DeChynne is one of the first to sell the pot policies in Oregon and Southwest Washington.

"It covers every kind of possible case; fire, rain, or wind, theft, even raids," he told KATU On Your Side Investigator Thom Jensen.

A spokesperson for the Washington State Office of the Insurance Commissioner says so far they have not received any inquiries or complaints about companies attempting to offer medical marijuana insurance.

Washington law allows a qualifying patient to possess up to 15 plants and up to 24 ounces of usable marijuana.

Video: “I foresee the insurance industry being a very very important part of medical marijuana as a whole and complete industry, including hemp.”

About the video, as described on YouTube: Sara Jane Sinclair is the CEO of Sara Jane Inc., a medical marijuana dispensary located in Sacramento, California. In this episode of Watching the Risks, Sinclair talks about the growth of the medical marijuana industry, how her insurance agent made her own business possible, and how her insurance needs are very similar to those of other small businesses.