RISK REPORT: TRANSPORTATION
Cannabis Transport Risk
There are billions
to be made, but
the product tread
By Craig Guillot
You won’t find legal weed rolling around in 18-wheelers. Smaller vehicles like these, preferably armored, are the transport of choice in
states where recreational marijuana is legal.
While driving around with a hundred pounds of marijuana might be a criminal activity in most places, it’s just another part of the business day in states like California, Nevada and Colorado. As legal marijuana gains a foothold across the United States, those in the industry say it’s an exciting and challenging time. With
a small, high-value product and lots of cash involved, the risk of theft is high. Add
in the myriad of state regulations and the prospect of a federal crackdown, and
legal cannabis transportation can be a risky business.
HIGH VALUE PRODUCT WITH BIG RISK
Recreational cannabis is now legal in eight states, and it is on track to become
a $24 billion industry by 2025, according to the Cannabis Industry 2017 Annual
Report. From the fields to counters of dispensaries, the growing industry
continues to face a number of operational challenges due to its unique legal status.
Because cannabis remains illegal under federal law, many banks and insurers
do not want to participate, leaving large parts of the industry unbanked and
As a result, there are notable risks in transporting product. Cannabis
distributors not only transport hundreds of pounds of high-value product but also
six-figure sums of cash.
For transport companies like Hardcar Security in California, the risk is big.
It took the company eight months to find insurance to cover their operations,
product and cash, said CEO Todd Kleperis.
“You become a huge target [for criminals] and your risk profile is off the
charts,” Kleperis says.
“It’s not an easy business to get in.”
Hardcar Security transports cannabis products and cash in California for the
medical and recreational marijuana industry. Due to the risk involved, Hardcar
operates more like a military operation than a transport company, Kleperis said.
Trucks are unmarked, armor-plated and equipped with bulletproof glass. Most
drivers are former military veterans, travel armed, and take different routes to
“We want to make sure that when people see our trucks, they don’t know if
its product or cash. I don’t even want them knowing what our trucks look like,”
GREEN INSURANCE OPTIONS
The legal marijuana industry is in its infancy, but a few insurers and brokers
are starting to enter the market. Zeyger Insurance in Calabasas, Calif., offers
insurance to every area of the cannabis industry, from manufacturing and
transportation to retail.
Zeyger president and founder Michael Senderovich has been attending cannabis
industry meetings and events to stay
in touch with the concerns and needs
of businesses. There is strong interest
coming from California, he said.
“There are already 10,000
applications in the city of Los Angeles
alone, and they are all still pretty much
pending. It’s moving very slowly, but
there is a lot of interest. And they need
insurance,” Senderovich said.
Much like any other industry,
cannabis companies are seeking insurance
products like general liability, workers’
compensation and product liability.
“We get a lot of startups that don’t
have a permit yet are looking for
quotes or coverage, and we really
can’t continue that process until
they show proof. Underwriters
are doing a good job of classifying
and clearing the prospects.”
— Denny Christner, CIC, Cannabis Insurance
Associates, a division of Brown & Brown Insurance
• Government seizure is one of the
biggest risks in cannabis transport
and is largely an excluded risk.
• Insurers are offering coverage
for every piece of the cannabis
supply chain, with exceptions.
• Armored trucks are a must for
most cannabis transporters who