Cannabis companies are confronted by the twin challenge of warding off an increasing number of expensive lawsuits brought against their directors and officers armed with inadequate available insurance policies to respond to those suits. Securities litigation, shareholder and investor disputes, allegations of mismanagement, and actions by regulators have proliferated in an environment of challenging regulatory compliance and market volatility for the cannabis industry. Meanwhile, the market for directors and officers (D&O) insurance currently is difficult for all industry sectors, but D&O insurance for cannabis companies rightly has been called “a hard market within a hard market.” Available policies have been exceptionally expensive with inadequate coverage limits, problematic exclusions, and a lack of reinsurance. The dearth of D&O insurance results in companies that are more exposed to volatility from risky decisions and less able to attract top executives whose personal assets may not be fully indemnified or protected when litigations are protracted.
Cannabis Business Executive – Cannabis and Marijuana industry news, 06/28/2021 22:30:00