What are Michigan's Attestation Forms for Cannabis Businesses?
Growing a successful business in the cannabis industry can be a challenge because your focus is essential in many different areas. Whether it is a product, marketing and sales, supply chain and logistics, day-to-day operations, employees, safety and security, and compliance with regulations and insurance. Of course, properly insuring your business is important, recognizing the complex (and mandatory) requirements of each state is critical. In Michigan, the laws and insurance requirements have had a few amendments clarifying what is required.
Michigan licensees are familiar with the insurance requirements under Section 408 of the Medical Marihuana Facilities Licensing Act (MMFLA). This states that an applicant/licensee must provide proof of financial responsibility in an amount not less than $100,000 for liability for “bodily injury” to “lawful users” resulting from the manufacture, distribution, transportation, or sale of “adulterated marihuana.” Each licensee then purchases a Product Liability insurance policy to comply with Section 408 and the issuing insurance carrier completes an Attestation form, certifying that “no products liability exclusion exists in the liability coverage”. (The most recent changes to the insurance requirements were to include “Gram Shop” laws in Michigan and the clarifications outlined in Michigan’s Senate Bill (SB) 461 and Public Act (PA) 55.)
Specifically, state law now requires the following:
- The insurance policy is issued by a licensed insurance company or licensed captive insurance company in this state.
- The insurance policy does not include a provision relieving an insurer from liability for payment of any claim for which the insured may be held liable under the act.
- The insurance policy covers bodily injuries to a qualifying patient, including those caused by the intentional conduct of the licensee or its employee or agent. However, the policy would not have to cover bodily injuries to qualifying patients caused by the licensee or its employee or agent when acting with the intent to harm.
In addition, a licensee must file an “attestation of compliance” with the requirements of the statute with the Cannabis Regulatory Agency (CRA), on a form approved by the CRA, which is signed by the officer of the licensed insurance company or licensed captive insurance company that issues the policy.
While the legislation may have some unintentional challenges and consequences for Michigan cannabis companies, the purpose of the law is to avoid insurers relying on specific exclusions to deny coverage when a licensee is sued. Should a licensee fail to maintain proof of financial responsibility as required under statute, the CRA will immediately suspend the licensee’s license until such proof is provided. A licensee also cannot cancel required liability insurance unless the licensee gives the CRA 30 days’ prior written notice and procures new proof of financial responsibility and delivers that evidence to the CRA within 30 days after giving notice.
These requirements certainly make it challenging for licensees in several ways:
- Cannabis operators are required to become experts on insurance and regulations, especially since there have been many changes since 2018.
- It creates barriers to insurers due to broad wording and the challenge of accurately price a policy that does not contain any exclusions.
- Each claim scenario is unique and therefore, we will most likely see claims of adulterated cannabis products denied. This would most likely lead to a cannabis license being suspended.
- It limits competition for cannabis insurance, leaving Michigan licensees with fewer insurance options, higher premiums, and ineffective coverage for products in many cases.
What should Michigan cannabis licensees do next?
Due to the complexity of both cannabis and the insurance industries, it is best to partner with an insurance agent that specializes in cannabis. The right agent is knowledgeable and experienced in both industries with access to all insurance markets. They can help you secure the necessary coverage with multiple options to choose from. You can learn more about finding the right insurance for your business here.
Whether you are applying for a new license or renewing an existing license, it is wise to review your current insurance policies for accuracy of coverage limits, and addresses and to ensure your insurance provider is compliant. To prove your compliance, you must submit the correct attestation form showing each location.
Attestation Forms
(2) A licensee or applicant must include with its filing under subsection (1) an attestation of compliance with this section on a form approved by the marijuana regulatory agency. An officer of the licensed insurance company or licensed captive insurance company that issues the policy described in subsection (1) must sign the attestation of compliance that the licensee or applicant is required to file under this subsection.
This means that the insurance carrier, not the insurance agent/broker, attorney, or licensee signs the Attestation form to certify that no liability risk exists that would exclude the coverage mandated. You can find Michigan’s attestation forms below which can be forwarded to your agent (and then the company) before being sent back to the insured/licensee to finalize their section of the form.
Spire America has collaborated with the leading insurers of cannabis businesses to provide a tailored insurance solution. Spire Insurance Solutions is your ‘expert buyer’ of insurance using national resources, which are locally sourced.
Please contact us with any questions or get started by requesting a quote here by clicking here.
More Cannabis Industry News
Want to stay up to date on the latest cannabis insurance news? You can find more on important topics in the cannabis industry on our blog.
Or get more information about insurance solutions for the cannabis, CBD, and hemp industries from Spire Insurance Solutions here.
About Spire Insurance Solutions:
Spire Insurance Solutions provides risk management solutions to both the Recreational & Medical Industry. Through a consistent approach, Spire is your expert buyer of insurance and helps companies purchase important Insurance coverages in the evolving Cannabis industry. With years over 45 years in business with experience in assessing risk, our team sees that many cannabis related businesses do not have the coverage they desperately need. Our mission is provide unparalleled and caring service to our clients through our knowledgeable staff and give back to our employees, agency, industry and our communities.
When it comes to insurance, it helps to work with an agency that has both the experience and capabilities to meet your needs. We will help you manage and plan for your potential risks. As professionals, we assess your needs and offer you a variety of insurance products to choose from. Let Spire Insurance Solutions elevate your insurance solution to help your growing business.
Disclaimer: This Blog/Web Site does not provide insurance or legal advice. This site is for educational purposes only as well as to provide you with general information and a general understanding of insurance, not to provide specific legal advice or specific contract advice. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute a client relationship.
The information on this Blog/Web Site is not intended to be a substitute for professional insurance or legal advice. Always seek the advice of a licensed agent in your state pertaining to insurance and legal issues.
Author: Tyler Bartosh