industry and there is a belief that they are
Seeing the big picture
making millions and millions. In reality,
compliance with state regulations eats into
the profit margin.”
Eduardo Provencio, general coun-
sel for Colorado-based Mary’s Brands,
which manufactures marijuana and
hemp-derived products, concurs. “This
industry is maturing pretty quickly. You
see a lot more suits and blazers than tie-
dye and dreadlocks. A lot of smart peo-
ple are getting into this space.” He shared
that the company has spent the last year
bringing in people with operations and
sales experience unrelated to the cann-
abis industy. “New executives come in
with experience from outside businesses
that has to be adapted to meet federal or
Another myth is that legalization is
somehow making cannabis more popu-
lar and causing it to proliferate. Not so,
says Morgan Fox, media relations direc-
tor for the National Cannabis Industry
Association. “It was already popular and
confined to an illicit market and people’s
private lives. Now it’s controlled by legiti-
He agrees that they’re seeing some in-
crease in consumption by adults where
cannabis is legalized. “We see older
Americans trying it for the first time be-
cause the stigma has been removed, or
they’re finding it useful for medical pur-
poses and pain management.”
Currently, there are approximately two
dozen carriers offering various types of
coverage to marijuana-related businesses.
What are some of the specific risks, challenges and concerns for cultivators, manufacturers and dispensaries that require
coverage? Here is a look at one enterprise
with multiple components. Each division
of the company has different levels and
types of risk.
• Mary’s Brands is the colloquial term
the companies use to describe the
multiple entities and business lines.
Founded in 2012, the company entered the medical marijuana product market in 2013. The co-founders
wanted to pursue the medicinal properties of the plant, explains Provencio.
The standard users for their products
are usually older, first-time users,
some “soccer moms” and others who
are more discrete users/purchasers.
Their flagship product is a transder-mal patch used for pain management.
• MM Technology Holdings, licensed
in Delaware, is a technology holding
company that houses all of the company’s trademarks, and product technology, which are licensed to other
affiliated entities of the company.
• Mary’s Medicinals is the locally
owned entity that houses the com-
pany’s plant-touching products and
is licensed in Colorado. It holds the
recreational and medicinal-infused
product state licenses, and manu-
factures and sells products under
the Mary’s Medicinals brand name
to dispensaries, who in turn sell the
products to consumers.
• Mary’s Nutritionals is the entity that
produces industrial hemp-derived
products under the Mary’s Nutritionals, Mary’s Methods, and Mary’s Tails
(a hemp product line for pets) brand
names. Unlike Mary’s Medicinals
products, which must adhere to the
stringent state marijuana regulatory
regime, Mary’s Nutritionals products
are produced and distributed nationally and internationally.
• Mary’s Operations is not a
plant-touching entity but it supplies
the non-marijuana and non-hemp
components (such as the patch the
marijuana or hemp product goes on)
for the marijuana and hemp-product
• Mary’s Management serves as an
employee-leasing entity, which provides employees for many of the company’s various affiliates.
Provencio says the company works with
a broker that specializes in cannabis insurance, and finding insurers is still a challenge. The company’s premiums are generally higher than those paid by standard
commercial businesses because there are
fewer carriers with which to work. Some
of their risks include auto liability because
they have drivers who deliver their products, product liability and employee theft
because they are a cash-heavy business.
They use an armored car service to transfer their funds to a local credit union.
The company carries general liability,
product liability and medical expense
for its hemp-derived businesses, product
loss, employee theft, and directors & officers liability for their leadership team.
“The problem is that there are limited
options for coverage,” explains Provencio.
“We really have to look at all of the exclusions and endorsements to make sure
we have the coverage we need, especially
CANNABIS IS NOT A NEW EXPOSURE, BUT IT’S
THE EXTENT THAT IT’S BEING LEGALIZED AND
DECRIMINALIZED THAT CREATES NEW EXPOSURES