Mythbusters: Debunking Cannabis Insurance Myths & Misconceptions

1. Mythbusters: Debunking Cannabis Insurance Myths& Misconceptions Presented By: Mike Bush & Mallory Czuchra National Cannabis Insurance Services, Inc.

2. National Cannabis Insurance Services www.ntlcannabis.com l 800-216-4345 • 100% cannabis insurance agency • Focus on: cannabis specific coverages, limits, endorsements • As quoted in: • Cannabis Business Times • Cannabis Financial Network • Risk & Insurance • Culture is focused on providing friendly, responsible, and knowledgeable customer service

3. Disclaimer www.ntlcannabis.com l 800-216-4345 The information in this webinar is made available by National Cannabis Insurance Services (NCIS) with the understanding that NCIS is not engaged in the practice of law, nor is it rendering legal advice. The information contained in this webinar Is of a general nature and is not intended to address the circumstances of any particular individual or entity. Legal obligations may vary by state and locality. No one should act on the information contained in this webinar without legal advice from a competent and licensed legal professionals. The information contained in this webinar is distributed by NCIS "as-is" without any warranties. NCIS will have no liability to any person or entity with respect to any losses or damages cause or alleged to have been caused directly or indirectly by the information in this webinar, regardless of whether such claim is based on contract warranty, tort (including negligence and for property damage and death) or other grounds.

4. Today’s Agenda www.ntlcannabis.com l 800-216-4345 • Myths & Misconceptions • Why do I need insurance? • What kinds of claims or risks should I be aware of? • How do I make sure my business is covered if I experience a cannabis related loss? • Is insurance available for cannabis businesses? • How do I evaluate which agent and policy is best for my business? • Exciting Announcement

5. Delicate Balancing Act Premiums Coverage www.ntlcannabis.com l 800-216-4345

6. Myth: Insurance policies do not cover cannabis operations www.ntlcannabis.com l 800-216-4345 Reality: Some don’t, others do • All insurance policies are not created equal • Coverage lies in the details. Potential exclusions: • Health Hazard • Impairment • Schedule I • Pollution • Psychotropic Substances • Policies written for cannabis operations pay legitimate claims

7. Myth: I only need enough insurance to meet the state and local requirementsReality: False Insurance Lingo Real Life Compliance vs. protecting your business Insurance considerations Exposures Coverages Different entities Limits Assets Contracts Cash flow What is YOUR risk tolerance? • Minimum requirements • Vary by state and potentially municipality • General Liability • Product Liability • Workers’ Compensation • Contractual obligations? • Vendors, investors, landlord… www.ntlcannabis.com l 800-216-4345

8. Myth: I don’t need crop insuranceReality: Yes, you do! www.ntlcannabis.com l 800-216-4345 • Fires happen • Jan. 2018 – Warehouse fire in Oakland • July 2018 – Greenhouse fires outside of San Francisco • Sprinklers matter • 2017 – Thomas Wildfires • Smoke and ashes resulted in plants testing positive for asbestos, lead, arsenic and magnesium • You CAN self-insure a crop loss • What is your source of revenue? • What is and is not covered? • Covered: fire, lightning, wind, hail, theft and sprinkler leakage • A few Not Covered perils: changes in climate conditions, mold, disease and fertilization issues • Exclusions vary by policy!!!

9. Myth: All products are rigorously tested, Product Liability is an unnecessary coverageReality: Product Liability is one of the most important coverages www.ntlcannabis.com l 800-216-4345 • Testing requirements don’t eliminate the exposure • Product recalls in CA in 2018 • Liability based on defect, negligence, or strict liability • Strict liability: manufacturing, design and warning defects (labelling) • Does not require negligence or intent to harm • The entire supply chain has a product liability exposure • Impairment/Psychoactive Effects • Richard Kirk claim • Defense cost, $876,000 average • Require Additional Insured status on vendor policy • Claims happen, understand your policy

10. Questions to Ask when Shopping for Cannabis Business Insurance www.ntlcannabis.com l 800-216-4345 • What are my biggest exposures? • Product Liability, General Liability, Crop • Other exposures? • Employment Practices Liability • Directors and Officers • Workers Compensation • Business Auto • Cargo • In the event of a claim, how will I know I’m covered? • What are the common coverage gaps?

11. Consult an Agent with Cannabis Expertise www.ntlcannabis.com l 800-216-4345 • Not all policies are created equal • Understands cannabis AND your exposures • Your policy should be cannabis-specific • Understand what is and is not covered? • Endorsements • Exclusions • Lawyer, accountant, insurance agent You have options, including us!

12. One more thing… www.ntlcannabis.com l 800-216-4345

13. Current CannabisInsurance Marketplace www.ntlcannabis.com l 800-216-4345 Limited insurers Coverages – lack of availability Exclusions and sticky policy language Insufficient Limits Goal of eliminating coverage gaps is currently a challenge

14. New Program - Summary www.ntlcannabis.com l 800-216-4345 • New Insurance Company • Full Coverage Options • Higher Limits • Endorsements • Defense Outside Limits • Product Withdrawal Expense • Outdoor Crop Coverage Interested? Contact us for a quote

15. Questions? Mike Bush 440-214-0522 mbush@ntlcannabis.com Mallory Czuchra 216-316-1870 mczuchra@ntlcannabis.com www.ntlcannabis.com l 800-216-4345