The Importance of Commercial Insurance for Your Cannabis Business

A Sit Down with Michael Fragias, Co-CEO of Reliant Insurance Agency, and Owner of Fragias and Associates, LTD.

With the most recent passing of laws regarding Cannabis legalization, we can expect to see another huge increase in cannabis business, cannabis dispensaries, cannabis farms, and more- span across the United States. Being a business owner in the industry myself, I know how vital it is to stay informed and educated but cannot always find a reliable resource to turn to. One area I needed schooling in was insurance for a cannabis business.

It was so great to sit down (via Zoom) with Michael Fragias– an insurance agent, agency owner, and OG in the insurance industry- who schooled me on cannabis business insurance. Michael has been in insurance and finance for over twenty years. He is the co-founder of Reliant Insurance Agency and now owns Fragias and Associates, LTD, an independent agency out of Rolling Meadows, Illinois.

In our chat- which you can tune into below- covered all things cannabis business insurance

  • There are only a handful of insurance companies that work with Cannabis businesses.
  • Insurance options Michael suggests to those in and to anyone considering entering the Cannabis space
  • Opinions on cannabis legalization.
  • Insurance premiums in the cannabis space.
  • The states that Reliant can provide cannabis insurance coverage.
  • And so much more. 

For those that can’t tune into audio, please check out the summary below. 

Reliant Insurance Agency

Reliant Insurance Agency made the move into Cannabis in 2014, leading the pack, as one of the very first to do so. Reliant insured restauranteurs, grocery store owners, and others in the food iIndustry, whom most of which, according to Michael, went into cannabis around the same time.

Michael and his partner aligned themselves with investors in Cannabis cultivation and dispensaries. Interested to see what they could offer their partner’s customers, in the way of insurance, they immersed themselves into the unknown. The two were involved in every step, beginning to end, including getting licensed, obtaining facilities, growing the plants, buying machinery, and even hiring staff.

Growing A Successful Business and Team

Taking their knowledge and experience gained, the pair built an impressive portfolio spanning across Illinois, including states on east and west, such as Michigan, Florida, Arizona, and Nevada. A small, close-knit team grew and continues to work closely with Michael today as they write for companies in all 50 U.S. States. Michael shared:

“As we grew, and we’re still growing, we added a couple of pieces; capable Risk Insurance Managers – who also have “Cultivated” their (no pun intended),skill set to better serve the Cannabis community. That goes for the investor, the policy holder, the stakeholders, the employees… so, the whole ball of wax.”

Insurance Options for Cannabis Cultivation Sites/ Facilities and Dispensaries

Being in cannabis myself, I wanted a full rundown of insurance options. I was also interested to see what Michael believes to be the most important insurance to carry while operating a cannabis cultivation site or dispensary. Here is a short list of must haves:

Product Liability – To cover consumer purchasing – this can help cover your legal expenses if someone claims that a product you sold, made, or distributed caused an injury or property damage.

Professional Liability – To cover those dispensing products – this can help cover you and your company if you make a mistake in your professional services. This coverage is also known as Errors and Omissions Insurance (E&O) or in some countries as professional indemnity insurance.

Workers Compensation – To cover the workers picking product, manufacturing, and employees – this provides benefits to employees who suffer work-related injuries or illnesses. Specifically, this insurance helps pay for medical care, wages from lost work time and more.

Structures and Buildings CoverageGreenhouses, for example. Michael stressed the importance of revealing accurate information to underwriters to ensure the proper coverage. He also explained machinery not only has to be insured, but also needs additional insurance if there is a “rush” put on the delivery of said machinery.

A Fiduciary Duty and Risking It All with Omissions

The last coverage we went over is Directors and Officers (D&O) Liability Insurance. This is put in place to cover decision makers/shareholders making decisions in companies. Fragias and Associates, LTD. has a fiduciary duty to present this policy just in case things do not go as planned in companies. Coverage of this nature protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.

Michael warned me that the biggest risks of not having insurance or not having the proper insurance is the Omission of Verbiage in policies. This is when verbiage is omitted during the underwriting process, mostly done to save money on the policy. Premiums could cost less, but coverage could be not good enough or not what they need.

Why You Should Choose the Professionals at Reliant Insurance / Fragias and Associates, LTD.

“We care. We are small enough to care about every single policy holder. We are not an alphabet house, which means a mature, 100-year-old agency with a plethora of customers that everybody there is just a number. From the 50 people that we handle, we handle as if they were our aunts and uncles and we address situations that way.” – Michael Fragias

The above quote says it all… Michael expects federal legalization within the next 24 months, depending on the Senate’s decision. If they decide to go green – there will be a vast increase in the number of products that Michael can offer his client base.No matter what- if you’re seeking to open a cannabis business, your cannabis business will need insurance. The time to look into cannabis business insurance is now.

When I asked Michael what advice he has for Cannabis businesses and owners, he eagerly added: 

“Invest in employees and protect them. They are the backbone of operations- business owners can’t operate the business alone. Business owners should provide good culture, guidance, and investment in their employees.”

Interviewed and Written by: Canna Pinup

Edited by: Veronica Castillo