The cannabis industry is still young, so the risks that it faces are unique. The NCRMA understands these risks and provides the best solutions and training for cannabis companies in search of sustained success.
I recently had the pleasure of chatting with Insurance Journal to provide my insights on the major risks that our organization has identified.
A major hurdle that the industry continues to face is the general perception that cannabis is bad. Other risks facing cannabis business owners come from the outside world and ongoing regulatory battles. For example, cannabis is still considered a Schedule I drug, which places it in the same category as heroin and LSD. Thus, cannabis operators are unable to do businesses with federally insured banks.
This forces many companies to do business with cash, which, in turn, creates more risk, and many companies find it difficult to get financing. This hampers their ability to survive in a highly competitive industry.
We have polled our members to get an idea of what they are hearing and seeing in their day-to-day operations. When asked, “What is your biggest risk?”, the answers did not fall anywhere near the traditional definition of “risk” that has been dictated to us by insurance companies.
In fact, here are the three biggest risks that our NCRMA members identified:
- The “people” issue: there are more jobs than there are applicants, which slows business growth.
- The media perception of the industry often skews negative, which affects companies’ abilities to obtain permits from local governments, gain broader public acceptance, or buy insurance.
- Financial risks such as banking, payment processing, financing, and funding.
In general, negative press coverage and public perceptions has the industry itself confused. It can be difficult to know exactly what to read, what to listen to, and what to believe when the information itself is across the board and constantly changing.
On top of all of these risks, the cannabis industry is still developing, which creates a legitimate concern for lenders and insurers. The NCRMA seeks to bridge this gap between lenders and cannabis owners by providing accurate information and support.
That said, we are hopeful for the future of the industry and look forward to the eventual passage of the Secure and Fair Enforcement Banking Act, H.R. 1595 (SAFE ACT), to address some of the aforementioned financial risks.
Chairman of the Board
Click here to read the full Insurance Journal interview.
For more information on how to become a member of the NCRMA and stay ahead in the cannabis industry, click here.