Real estate for cannabis entities – what are the insurance issues?


Last fall, ALM introduced the insurance industry’s first designation for companies serving cannabis-touching businesses, the Cannabis Insurance Coverage Specialist (CICS). The designation comprises six courses:  a general overview of the cannabis industry, a review of the issues involving risk management, real estate, and claims, workers’ comp and legal employment questions, and a look at factors for business advisors to consider when working with companies operating in the cannabis space.

ALM recently launched the real estate module, which addresses the different types of real estate needed for cannabis entities, zoning regulations, leasing, pollution coverage issues and more. Danielle Hernandez, a commercial and risk insurance specialist with 18 years of experience in manufacturing, commercial real estate, construction and franchising is the author and subject matter expert for the course. She has been working in the cannabis insurance space for six years, focusing on cannabis Real Estate Investment Trusts (REITs), cultivation operators, dispensaries and extraction facilities.


In the latest Insurance Speak podcast, Hernandez discusses the choices between buying and renting facilities for cannabis businesses. “It’s a financial decision because they don’t have the traditional lending opportunities available to other businesses,” she explains. “It’s also a supply and demand issue, and the landlords hold the keys.”

Since cannabis is still illegal on a federal level, many banks are wary about lending money to these entities. “Businesses need to find their own funding,” she says, and there are vehicles like REITs that can be used to fund real estate purchases for cannabis entities. These businesses also need to be wary since non-traditional lending can also lead to predatory practices. She cautions any companies pursuing funding to use an attorney to vet the players before entering into an agreement.

Zoning is another consideration for any cannabis-touching business looking for real estate. Since zoning regulations are determined at the state, county/city and local municipality levels, the requirements for a local jurisdiction could differ from what a state allows, such as California. This can create issues for users and complicate negotiations and operations for business entities.

Hernandez also offers suggestions on clauses to watch for in leases and discusses some of the risks involved with the growing and manufacturing of products.

For more on this interview, listen to the podcast above or subscribe to Insurance Speak on Spotify, Apple Music or Libsyn. For more details on ALM’s Cannabis Insurance Coverage Specialist certification, visit


What are the real estate coverage risks for cannabis entities?

ALM launches Understanding and Handling Cannabis Insurance Claims course

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