Insurance Policy Refuses to Pay Damages to Marijuana Dispensary

large-growA suit filed by Green Earth Wellness Center against insurance company Atain was granted in part and denied in part in a February 17th ruling by U.S. District Court Judge Marcia Kriger.

The Colorado Springs based medical marijuana dispensary made a claim after a 2012 wildfire damaged the grow operation’s ventilation system, resulting in damage to growing plants and harvested buds. Specifically, Green Earth is seeking more than $200,000 for damage to “mother plants” and “clones,” as well as $40,000 in damage to dried flower being prepared for sale.

Atain issued a commercial property and general liability policy to the dispensary and grow operation, but has denied the claim based on a “growing crops” exclusion and, as marijuana is still federally illegal, a “contraband” exclusion.

U.S. District Court Judge Marcia Krieger ruled that the $200,000 claim for damaged plants were not covered under the policy; however, in regards to contraband, the Court found that the exclusion was “rendered ambiguous by the difference between the federal government’s de jure and de facto public policies regarding state-regulated medical marijuana.” Judge Krieger ruled that the breach of contract claim for the $40,000 in damage to harvested buds and flowers must be tried. A “case management conference” between the two parties is scheduled for May 10.


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