Colorado Executive Order Allows Cannabis and Hemp Curbside Pickup

Colorado Executive Order Allows Cannabis and Hemp Curbside Pickup

Governor Jared Polis has signed an executive order due to the impact of the coronavirus allowing medical and recreational stores to accept online, phone, and curbside pick up.  The emergency rules are effective for the next 120 days.

Please read the rule changes in blue carefully. 

Executive Order D 2020 11

Colorado Emergency Rule Adoption Response to COVID-19

Coronavirus Live Insurance Blog Update for Cannabis and CBD Companies

Coronavirus Live Insurance Blog Update for Cannabis and CBD Companies

Covid-19 Cannabis Insurance:  Latest News and Updates

Questions on Coronavirus:  Contact Us Here

March 16, 2020 11:49 a.m. MST 

Understanding Policy Coverages

The most frequent question we receive is whether business insurance – specifically Business Income and Extra Expense (“BI/EE”) – will provide coverage during business closure (or reduced hours) due to Coronavirus or COVID-19.  The closure or reduced hours may be voluntary or enforced by a government action.  For example, the ski resorts in Colorado are being closed by Executive Order from Governor Polis.  This is an example of a Civil Authority enforcing a law.

As of today, we know that insurance companies are having their legal teams evaluate the language within the insurance policies, to determine if coverage would be offered for a claim of this nature.

All of our carriers are consulting with their legal counsel at the moment.

Source:  Insurance Underwriter (CO) 

As such, it is important for cannabis licensees to review their policies and coverages with their Agent, to determine if Business Income and Extra Expense was purchased.  This form of income and extra expense coverage is typically triggered by a property loss (such as fire or theft to covered personal property), and may extend during the period of business interruption.

To learn more, here is an article written by attorneys on this topic, and available online:  Will Business Interruption Insurance Provide Coverage for Coronavirus Losses?   

Below are relevant sections from a proposal and standard insurance policy used in the cannabis industry.

Cannabis Insurance Declaration Page:   Do you have Business Personal Property and Business Income and Extra Expense?

Review the declaration page from your policy to determine if you have Business Income and Extra Expense with Business Personal Property as indicated in the sample below:

Business Income Extra Expense Business Property Coronavirus

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Specified Causes of Losses:  Is the Coronavirus considered an “Act of God”?

Sometimes known in the insurance industry as “triggering events,” below are events that some could consider “Acts of God”:  fire, windstorm, hail, etc.  The question is whether the Coronavirus qualifies as an “Act of God”, or if it’s specifically excluded.

Causes of Loss CoronaVirusWe searched various insurance policies for key words such as “Act of God”, “virus”, and “pandemic” and certain policies seemed to be silent on these terms. The fact that these terms are silent might be an opportunity for interpretation by the insurance carriers and their lawyers.  

However, other policies included a specific policy form entitled “Exclusion of Loss Due to Virus or Bacteria” (ISO form CP 01 40), which specifies “We will not pay for loss or damage caused by or resulting from any virus, bacterium or other micro-organism that induces or is capable of inducing physical distress, illness or disease.”  This exclusion would seem to be problematic and potentially block coverage. 

Virus Exclusion in Some Insurance PoliciesBusiness Income and Extra Expense (BI/EE):  What does it mean? 

Below are two different examples of Business Income from insurance policies.  In plain language,  BI/EE typically provides Net Income or Loss before taxes, and normal operating expenses including payroll.  Determining whether manufacturing risks are addressed, or if executive payroll must be subtracted, will require a thorough review of your insurance policy.

Example A:  The coverages do not limit payroll.

BI-EE Coronavirus

Example B:  The coverages limit payroll by removing compensation for executives, department managers:

BI EE Coronavirus Carve Out Executive Compensation

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March 16, 2020 2:24 p.m. MST

Cost of BI/EE and Buying Coverage

“Should I buy or increase my business income and extra expense coverage before I close my doors due to Coronavirus?

Buying the BI/EE does not guarantee coverage for this event.  There unfortunately is no certainty if the BI/EE will be covered until a claim is filed and reviewed.

“How much does business income and extra expense cost?”

This depends on the insurance carrier and other factors.  One example:  $500,000 of BI/EE may cost $2,500/year or .50 per $100 of coverage.

You can estimate your premium for BI/EE below:

March 16, 2020 2:49 p.m. MSTMedical Cannabis Deliveries:  Non-Owned Auto Liability

The State of Michigan will apparently allow delivery of medical cannabis to patients due to the Coronavirus.  Cannabis licensees can review their insurance policy for non-owned auto liability insurance coverage.  If the employee is using their own vehicle, this insurance might provide excess liability over the employee’s personal auto policy, and could protect the cannabis licensee with additional coverage limits.  Coverage will depend on each carrier’s specific Underwriting Guidelines.

Non-Owned Auto Liablity CoronavirusTOP

March 16, 2020 6:31 p.m. MST  –

Premium Finance Payment Relief for Victims

If you are paying insurance premiums to a premium finance company, you may be entitled to payment relief.   ClassicPlan, the premium finance company we use at Greenpoint Insurance Advisors, LLC, is offering payment options for customers.  You may call them directly at (800) 347-6482 from 8:30am – 5pm PST to discuss your loan, or email them at cs@classicplan.com.   Please reference your Company/LLC name or your Loan number, if available.

March 17, 2020 11:58 a.m. MST

Pinnacol Assurance Workers Compensation

Important information for customers and their employees seeking testing for coronavirus exposure

In light of the unprecedented nature of the coronavirus (COVID-19) pandemic, we want to ensure all our mutual customers and their employees can get tested quickly if they suspect they’ve been exposed or infected with COVID-19 as a result of their work. 

If a customer or their employees need to get tested, please advise them to go to the medical provider of their choice, and Pinnacol will pay for the COVID-19 testing.  They don’t need to go to one of their designated workers’ comp providers for the test.If a customer or their employee believes there is a work-related exposure to COVID-19, we recommend they file a claim.  Should the test results be positive, current state law regarding workplace exposure will apply in order for Pinnacol to pay for further COVID-19-related treatment and benefits.

We realize this is an uncertain time for customers and their employees.  If you have questions about COVID-19 testing or claims, please contact your Pinnacol claims representative.  Also, we encourage you and our customers to visit Pinnacol.com for additional information on preparing their business for COVID-19.

We’re updating our site regularly with Frequently Asked Questions and other essential resources.  If anything occurs in the coming days to change this guidance, we will update you as soon as possible.

Thank you.

Further Information:  Coronavirus Questions and Answers for Colorado Businesses, Letter from Pinnacol CEO

 

March 17, 2020 12:15 p.m. MST – 

**UPDATE** Regarding Business Income & Extra Expense

After discussion with Underwriting today, it appears that the carriers are taking a position that Business Income & Extra Expense would need to be triggered by a direct physical loss of, or damage to, property at the business premises, that occurs as a result of a covered cause of loss defined within the policy.  Since that situation does not seem to exist in the case of the Coronavirus business closures, it could present challenges in collecting on a claim.  Unique circumstances such as these would require submitting a claim to see how it unfolds, with decisions based on policy language interpretation and case law. 

Policy Language:  We will pay for the actual loss of Business Income
you sustain due to the necessary “suspension”
of your “operations” during the “period
of restoration”. The “suspension” must be
caused by direct physical loss of or damage to
property at premises which are described in
the Declarations and for which a Business Income
Limit of Insurance is shown in the Declarations.
The loss or damage must be caused
by or result from a Covered Cause of Loss.

March 18, 2020 11:33 a.m. MST  Washington DOI Coverage Position on Coronavirus Covered or Not

The Washington State Department of Insurance has a link for insurance producers and consumers regarding the Coronavirus.  For business customers, they have issued the following statement on Business Income and Extra Expense:

Coronavirus: Insurance information for businesses

Washington state business owners typically buy insurance coverage to protect themselves from potential losses. With the outbreak of a coronavirus (COVID-19), business owners may question if their existing insurance policy covers this type of loss.

What you need to be covered from coronavirus and other outbreaks

To be covered against any business losses due to a communicable disease, such as COVID-19, you would need to have purchased an additional endorsement to your policy. Depending on the type of business you own, your agent or broker can tailor your endorsement to your business needs. For example, if you own a small convenience store, it might cover wages for employees who are sick and can’t show up for work due to a communicable disease outbreak.

At this time you might not be able to buy this type of endorsement. After the outbreak is over and the market’s stabilized, contact your insurance agent or insurance company directly to see if they even offer it.  

NOTE: The Office of the Insurance Commissioner does not have the authority to require insurers to sell any type of coverage or policy endorsements to consumers.

Small Business Administration and disaster assistance

The U.S. Small Business Administration (www.sba.gov) is offering some Washington state counties low-interest federal disaster loans for working capital to small businesses that are suffering substantial economic injury due to coronavirus.

Small businesses that qualify are encouraged to apply online for a disaster loan (www.sba.gov). If you don’t have a computer or smartphone access, call the Small Business Administration at 800-659-2955.

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March 18, 2020, 4:01p.m. MST Commercial Automobile Insurance Carrier Payment Relief

Commercial Automobile Insurance

Our primary provider of commercial automobile insurance will provide payment relief for those suffering from the Coronavirus.  If you have commercial automobile insurance with us, please contact us for more information

March 18, 2020, 4:27p.m. MST  N.J Fast Tracks Bill to Override Policy Language

New Jersey is fast tracking Assembly Bill 3844 to have Business Income and Extra Expense recognized as a covered loss for the Coronavirus.  Does this mean other states will follow?   Language from the bill essentially overrides any exclusions for viruses:  The coverage required by this section shall indemnify the insured, subject to the limits under the policy, for any loss of business or business interruption for the duration of that declared State of Emergency. 

March 19, 2020, 12:21p.m. MST  Cannabis Insurance Carriers Restricting BI/EE

The cannabis insurance carriers are responding with restrictions for adding Business Income and Extra Expense due to Coronavirus.  Below is a recent notification received by us:

Business Income with or without Extra Expense Coverage

Effective immediately, your binding authority is restricted with respect to adding and/or increasing Business Income with or without Extra Expense limits on the following business:

  • Any existing in-force policy mid-term; or
  • Any renewal policy at the renewal inception date

This restriction is in effect until June 1, 2020, unless otherwise communicated.

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March 19, 2020, 3:48p.m. MST California Department of Insurance

A statement issued by the California Department of Insurance will consider the extraordinary circumstances resulting from the coronavirus and business interruption.

March 20, 2020, 2:39 p.m. MST Update Michigan Delivery and Non-Owned Auto Liability

Michigan will allow medical marijuana deliveries due to the coronavirus.  However, insurance carrier who offer  non-owned auto liability will not broaden their coverage to cover a claim of this nature.   This means a commercial automobile policy must be secured. 

March 27, 2020, 9:37 p.m. MST

Even non-cannabis businesses continue to be shocked no coverage for the coronavirus may be available. 

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Due to the overwhelming number of questions, we will continue to provide ongoing information for the industry as it pertains to Coronavirus and its potential impact on insurance. 

DISCLAIMER:  Please review our terms of use with the mutual understanding insurance policies are subject to interpretation at many levels.  The following is not meant for insurance or legal advice.  Please consult with your lawyer and/or insurance representative for a better understanding of your unique situation.  The approval or denial of a claim is the legal obligation of the insurance carrier.  

Prices for Product Liability just Increased Vitamin E Acetate Removed from Coverage

Prices for Product Liability just Increased Vitamin E Acetate Removed from Coverage

Cannabis Licensees will pay more for insurance due to dangerous and deadly vaping-related respiratory illnesses

 

  • Cannabis licensees will pay more for product liability insurance

  • Vitamin E Acetate is being added to a growing list of ingredients insurance companies don’t want to cover

  • Cannabis licensee removes vaporizing devices off their shelf

The latest bad news with vaporizing devices causing death and lung illness did not take the insurance industry much time to start raising their prices for product liability insurance.  

One of our insurance carriers increased the price by 15% for a cannabis manufacturing company.  The increase in premium will also mean underwriting by insurance companies is about to become even more cumbersome.

Insurance carrier removes coverage for vitamin e acetate

No insurance coverage for Vitamin E Molecule

Even more interesting, the insurance carrier has added vitamin e acetate to the list of ingredients now being excluded or not covered if a claim or lawsuit was to be filed.   This ingredient has been identified by the New York State Department of Health as being linked to those individuals experiencing illness.   

A recent product recall by Medicine Man identified vitamin e acetate as a ingredient they did not want their customers consuming.

Vitamin E Exclusion

Vitamin E Acetate Product Liability Coverage Removal

 

 

Voluntary Product Recall for Vape Pens by Colorado Cannabis Licensee

Voluntary Product Recall for Vape Pens by Colorado Cannabis Licensee

Medicine Man Pulls Vape Products with Propylene Glycol or Vitamin E Acetate Off Shelves

 

  • Colorado based Medicine Man issues press release removing vape pens off their shelf if ingredients include propylene glycol or vitamin E acetate
  • Voluntary recalls might be a covered loss on certain product liability insurance policies.
  • Recalling a product will not typically jeopardize the indemnification provision in most product liability policies.   

In a press release, Colorado based cannabis licensee Medicine Man is removing all vape products containing the ingredients propylene glycol or vitamin E acetate.  Vitamin E acetate has been identified by the New York State Department of Health as being linked in their investigation with victims suffering health consequences. 

Product recall covered by insurance?

From a insurance and risk perspective, Medicine Man is taking the prudent step to reduce their potential liability exposure by removing product for sale, if indeed these ingredients are linked to the national health risks associated with vaping.

A “product recall” is typically defined in most product liability insurance policies.  This definition will help determine the type of recall being performed and how the policy may respond.  For example, some policies define product recall based on notification from an authorized government entity versus a voluntary recall.

Depending on the cannabis product liability insurance company, the costs covered for a recall may include notification, transportation, and disposal of product depending on the policy wording.

Does a product recall jeopardize my liability protection?

Not typically.  A product recall demonstrates being proactive and reducing liability for the licensee and insurance company.  Most reasonable insurance companies will view these actions as mitigating your risk exposure.     

If it is determined vitamin e acetate is responsible for the health problems, then cannabis licensees should begin analyzing the many risk factors such as any potential legal basis of the claim or lawsuit, types of damages, other  parties involved, and how their insurance carrier might respond based on the policy wording.

       

 

Deaths and Respiratory Issues from Vaping Devices will cause Insurance Carriers to Contemplate Product Liability Coverage

Deaths and Respiratory Issues from Vaping Devices will cause Insurance Carriers to Contemplate Product Liability Coverage

Could the Use of Cannabis Vaping Devices be the Next Wave of Insurance Claims?

Today, the California’s Cannabis Industry Association (CCIA) issued a statement responding to recent respiratory issues caused by vaping devices.  There have been 60 reported cases in California, but no cases have been associated with products purchased from California cannabis licensees.  There has been one death in California according to SF Gate

The CCIA may be responding to a recent death that occurred in Oregon connected to a cannabis device purchased from an Oregon cannabis licensee.  The Oregon Health Authority issued a statement on September 3, 2019 indicating the following:

Investigators at the OHA Public Health Division say they received reports that the individual, who died in July, had recently used an e-cigarette or vaping device containing cannabis purchased from a cannabis dispensary.

This investigation is ongoing, but may be the first death linked to a cannabis vaping device purchased from a licensee in the history of the United States. 

Black Market THC devices

Source: New York Department of Health

The State of New York has also insured a warning to the public.  Their focus is on unregulated cannabis devices bought in New York illegally with preliminary indications of high levels of vitamin E acetate.

Laboratory test results showed very high levels of vitamin E acetate in nearly all cannabis-containing samples analyzed by the Wadsworth Center as part of this investigation. At least one vitamin E acetate containing vape product has been linked to each patient who submitted a product for testing. Vitamin E acetate is not an approved additive for New York State Medical Marijuana Program-authorized vape products and was not seen in the
nicotine-based products that were tested.

The State of New York has provided product images from black market devices that can be viewed here.

Expect Product Liability Insurance Carriers to Take Immediate Action through Policy Modifications

The cannabis insurance industry will likely evaluate the potential impact of these events on products being offered and bought by licensees.  At this stage it would appear vitamin E acetate has been isolated with illegal cannabis vaping devices. If the product purchased in Oregon has the same ingredient, then insurance carriers might not react as quickly.   

The type of insurance most likely to pay for claims and lawsuits is product liability coverage.  These policies were designed to provide liability protection for cannabis products like vaping devices when they enter the stream of commerce and consumed by a third party.  

If a respiratory illness or death was to occur using a cannabis vaping device, then insurance of this nature will respond to any claims or lawsuits that could arise.  These policies offer starting limits of $1,000,000 with legal defense included for bodily injury damages.  The respiratory illness or death would fall under the category of bodily injury as defined by the policy terms.  

The Oregon death related to a cannabis vaping device could trigger the few product liability carriers to immediately modify their policy terms through an exclusion to eliminate this threat or cause certain insurance carriers to exit the industry.  That exclusion may be a simple removal of vitamin E acetate also known as alpha-Tocopherol acetate or Tocopherol acetate to an outright ban on any type of vaping device.

Cannabis licensees should review their product liability insurance coverage

Determine if you have product liability insurance.  Most commercial general liability policies will remove the coverage.  The insurance term to indicate coverage is typically “Products & Completed Operations.”

If you have product liability insurance review if vape pens or vaporizing devices are excluded on your policy or included on your list of products to be covered.  This modification is most likely to show up as a separate page and might require a review from your attorney. 

A recent blog article comparing product liability insurance carriers graphically indicated four insurance companies are covering vaporizing devices. 

Below is an example from a policy indicating devices used for vaping must be covered 

Vaporing devices product liability included

Vaporizing devices has been included on the list of products being sold by this licensee

 

Vaporizing Devices Exclusion

Specific policy exclusion for vaporizing devices

 

CCIA Statement on Vape Pen Illness

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Oregon Public Health Statement

[pdf-embedder url=”http://cannabishempinsurance.com/wp-content/uploads/2019/09/Oregon-DPH-Cannabis-Vaping.pdf” title=”Oregon DPH Cannabis Vaping”]

New York Department of Health

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