A New Option for Protecting Cannabis Business Assets A series of recent moves within California’s insurance industry indicate that cannabis business owners may be better able to protect their assets from future acts of force majeure. The Insurance Journal reports that, for the first time, a carrier admitted to the California Department of Insurance has filed to provide coverage to legal cannabis businesses within the state. Other carriers have expressed the desire to file with the Department to offer similar products to the legal cannabis industry. Standardized insurance forms for the cannabis industry may also be available in the very near future. State Insurance Commissioner Dave Jones is actively studying the needs of the cannabis industry and how the Department can help remove certain barriers to coverage. At a public hearing in Los Angeles, Jones spoke with business owners about obtaining access to coverage, the availability of affordable coverage, and critical gaps in coverage. This is a particular problem for businesses lacking adequate liability insurance in California’s liberal civil lawsuit climate, which tends to favor plaintiffs’ judgments. Many business owners reported that they were able to access worker’s compensation coverage, but directors and officers coverage was reportedly more difficult to come by. The Many Ways Cannabis Business Owners Can Protect Their Assets Even within the framework of existing regulations and restrictions, business owners can protect their assets in many different ways. Insurance coverage may be available for buildings and structures, as well as company vehicles. Alternative financial services are available to cannabis businesses, and this can preclude the need to operate an entirely cash-based business. It also reduces the risk of violent crime faced by any business with large reserves of cash. As the insurance market adapts, expands, and reforms itself to meets the needs of the legal recreational cannabis market, business owners must be prepared to access all necessary insurance services. It is also critical for business owners to find other means of protecting their assets when insurance coverage is not available. A cannabis business planning attorney can help business owners find and access the right tools to protect their businesses. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: Admitted Carriers, CanaBOP Coming to California’s Cannabis Industry, October 20, 2017, by Dan Jergler, Insurance Journal More Blog Entries: How California Marijuana Growers Are Rebuilding Their Businesses After Devastating Wildfires, October 21, 2017, by Cannabis Law Group

The Conflict Between Business Needs and Conservation of State Resources California’s Mojave Desert is the site of many new cannabis grow operations. News Deeply reports that American Green (the country’s largest publicly traded marijuana company) purchased the entire town of Nipton, California. Nipton is home to twenty residents on eighty acres of land. American Green plans to turn it into the first cannabis resort in the United States. The resort will boast Wild West themed amenities, employee housing, and bottled water infused with cannabis. Unfortunately for American Green, the huge water demand of these activities could conflict with the provisions of California’s new Sustainable Groundwater Management Act. For the first time in California’s history, groundwater users must ensure that aquifers to not suffer from chronic depletion. Business owners now have a legal obligation to ensure that their depletion rate of groundwater aquifers does not chronically outpace the recharge rate by precipitation. This places responsibility on private business owners to manage their use of valuable natural resources. In the area surrounding Nipton – where a golf club and the world’s largest solar thermal power plant have already placed significant demands on area groundwater – this responsibility could become onerous. These concerns raise a larger policy debate about water rights in the desert. With drought water conservation restrictions only recently being lifted by Governor Brown, California is far from having a surplus of water resources. While this state resource must be managed appropriately, it is also difficult for business owners to sustain profitable operations in the face of serious water restrictions. And yet they have legal obligations to protect state resources. When asked about American Green’s depletion of its groundwater aquifer, its president claimed that “We have access to a very large aquifer, and we’ll be using it accordingly. If it’s 32 million gallons, and we take a million or two, it won’t be noticed.” This nonchalant attitude may not bode well for either water protection in the Mojave Desert or sustained profitability of American Green. It will be especially problematic as American Green launches an entire product line based on the depletion of its groundwater. With water rights more important now than ever, cannabis business owners need the experienced advice of a cannabis business license and permit attorney. An attorney will ensure that your business has submitted accurate applications and received all permits and licenses required for lawful business operations. He or she will also ensure that cannabis farmers and grow operations receive fair water rights, and are not placed at an unfair advantage by the nature of their businesses. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: Does California Have Enough Water for Marijuana Hot Spot in Desert?, October 23, 2017, by Matt Weiser, News Deeply More Blog Entries: Marijuana Industry Revives a Solar Ghost Town, September 13, 2017, by Cannabis Law Group

This is not unlike the British phenomenon of “TV pickup”. There, utility administrators must respond to predictable surges in electricity use. Geek.com reports that these surges are a well-documented correlate of the widespread use of electric tea kettles immediately after popular TV programs end. The British National Grid allots an electricity reserve to manage these surges, and can even access reserves in France when needed. If there is a lesson to be learnt from British utility services, it is that careful planning around reliable data can be used to prevent interruptions in service and other problems as a result of increased electricity demand.

California Utility Companies Prepare for – and Respond to – Energy Demands of Growing Operations According to CBS Sacramento, the Sacramento Municipal Utility District is working with growers who have submitted applications for indoor cultivation to identify and meet their power needs. These cultivation businesses are restricted to commercial and industrial zones per Sacramento city ordinance. The Utility District has the ability to meet the needs of current applicants, but will continue to examine its infrastructure to ensure it can handle the increasing needs of new applicants. This may involve ungrading or expanding transformers for the affected areas. Interestingly, the ability to meet the needs of marijuana growers has proved to be a disappointment for some utility companies looking to profit from the increased energy demands of indoor growing. The Denver Post reports that the city of Tacoma, Washington prepared for a surge of energy demand that turned out to be much smaller than expected. This was after Pugent Sound Energy of Bellevue, Washington supplied over seventy marijuana growers with energy-efficient LED bulbs for their growing operation. This and similar technologies have allowed growing operations to mitigate their energy demands – demands which can be as much as five times higher than those of the average industrial user. And despite the fact that it prohibits the growth of marijuana indoors, Colorado experienced a one to two percent increase in statewide energy demands after legalized recreational marijuana. It is still too early to know exactly how California’s energy demands will respond to the legalization of marijuana. Business licenses for the sale of marijuana will not be issued until January 1, 2018, and it will be sometime after that before a reliable body of sufficient research can be used to identify energy consumption trends. Moreover, while California will allow indoor marijuana grows, its growers are likely to use the natural light which is less available to growers in Washington and Colorado. This, too, will impact the overall energy consumption of the California cannabis industry. Regulation of the cannabis industry in California is going through an unprecedented level of change. Everything from business licenses to availability of resources can pose problems for cannabis business owners who are unprepared to meet these challenges. An experienced marijuana lawyer will help devise strategies to ensure continued business operation throughout the dynamic regulatory climate. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: Indoor Marijuana Grows May Increase Power Needs in California, July 12, 2017 by Drew Bollea, CBS Sacramento More Blog Entries: Marijuana Energy Consumption Increasingly Becoming an Issue, November 20, 2015, by Cannabis Law Group