Robert Celt
New Member
A federal judge in Colorado recently ruled that a commercial property and general liability policy issued to a medical marijuana dispensary and its cultivation facility can provide coverage for harvested marijuana that is damaged or destroyed. In the case of The Green Earth Wellness Center, LLC v. Atain Specialty Insurance Company, smoke and ash from a wildfire entered the facility's ventilation system and damaged Green Earth's potted pot plants to the tune of $200,000, with an additional $40,000 in damage to plants that had already been harvested and were being prepared for sale.
The policy covered Green Earth's "Stock," but excluded "Contraband" and "growing crops." The court held that the potted plants were "growing crops," so no coverage was available for their loss. While the parties agreed that the $40,000 worth of harvested plants were "Stock," the insurer argued that they were "Contraband" and that coverage for their loss would be contrary to law and public policy because their cultivation is prohibited by federal law.
The policy, however, was governed by the law of the state in which the suit is brought. Thus, Colorado's state law — which does not prohibit the cultivation of medicinal marijuana — applied. Noting the "nominal federal prohibition against possession of marijuana," the court held that the term "Contraband" was rendered ambiguous "by the difference between the federal government's de jure and de factopublic policies regarding state-regulated medical marijuana."
The court also rejected the insurer's argument that coverage would be against public policy, declining to follow a 2012 decision from another district court which held that enforcing the terms of an insurance policy to cover damage to marijuana plants would be contrary to federal law and public policy. Thus, Green Earth's claim for the $40,000 in damage to the harvested plants is headed for trial.
It remains to be seen whether the ruling will be appealed.
News Moderator: Robert Celt 420 MAGAZINE ®
Full Article: Harvested Medical Marijuana Is Covered "Stock" Under Commercial Property Policy
Author: Hunton & Williams LLP
Contact: Lexology
Photo Credit: None found
Website: Lexology
The policy covered Green Earth's "Stock," but excluded "Contraband" and "growing crops." The court held that the potted plants were "growing crops," so no coverage was available for their loss. While the parties agreed that the $40,000 worth of harvested plants were "Stock," the insurer argued that they were "Contraband" and that coverage for their loss would be contrary to law and public policy because their cultivation is prohibited by federal law.
The policy, however, was governed by the law of the state in which the suit is brought. Thus, Colorado's state law — which does not prohibit the cultivation of medicinal marijuana — applied. Noting the "nominal federal prohibition against possession of marijuana," the court held that the term "Contraband" was rendered ambiguous "by the difference between the federal government's de jure and de factopublic policies regarding state-regulated medical marijuana."
The court also rejected the insurer's argument that coverage would be against public policy, declining to follow a 2012 decision from another district court which held that enforcing the terms of an insurance policy to cover damage to marijuana plants would be contrary to federal law and public policy. Thus, Green Earth's claim for the $40,000 in damage to the harvested plants is headed for trial.
It remains to be seen whether the ruling will be appealed.
News Moderator: Robert Celt 420 MAGAZINE ®
Full Article: Harvested Medical Marijuana Is Covered "Stock" Under Commercial Property Policy
Author: Hunton & Williams LLP
Contact: Lexology
Photo Credit: None found
Website: Lexology
