In California’s wildfire-prone regions, cannabis farmers face unique challenges in securing insurance for their high-value operations. Cannabis, despite its booming $5 billion industry within the state, remains federally classified as a Schedule I substance, preventing many conventional insurance providers from covering the crop.
The Wildfire Risk Impacting California’s Emerald Triangle
In areas like Humboldt, Mendocino, and Trinity counties — collectively known as the Emerald Triangle — cannabis cultivators face increased risk. With wildfire seasons growing longer and more intense, even established insurers like State Farm are withdrawing from the market, leaving properties uninsured and at risk. Farmers like Hannah Whyte, whose farm produces up to 1,600 pounds of cannabis annually, have become “uninsurable” under traditional and state-created plans due to federal restrictions.
The FAIR Plan’s Limited Options for Cannabis Farmers
California’s FAIR Plan, established to help provide coverage for high-risk properties, excludes cannabis farms, citing federal restrictions. Cannabis growers must either forgo insurance altogether or attempt to cover their farms in other ways — a choice that presents significant risk, especially as wildfires continue to escalate.
Regulatory Hurdles and Cost Concerns
Even where insurance is available, premiums for cannabis growers are notably higher than other agricultural sectors, and policies may require additional, costly coverage beyond wildfire protection. Michael Polson, of UC Berkeley’s Cannabis Research Center, highlights that these challenges often stem from policy restrictions on where cannabis farms can be located, placing many within high-risk zones.
A Call for Change in Cannabis Coverage
Although regulatory steps, such as California’s 2022 law allowing insurers to provide cannabis coverage without facing criminal charges, have improved the landscape, the demand for further reform persists. Former insurance commissioner Dave Jones has advocated for expanding the FAIR Plan to include cannabis-related risks, noting that these farmers are essential contributors to California’s economy.
As Skyscraper Insurance strives to support a diverse range of clients facing unique challenges, these issues underscore the importance of continually adapting our insurance solutions. At Skyscraper, we aim to work closely with top underwriters and industry leaders to craft comprehensive solutions, even as the landscape of cannabis insurance evolves.
