Hannah Whyte, a cannabis farmer in California, is among thousands of residents struggling to secure insurance against the rising threat of wildfires. Her 77-acre farm, nestled deep in wildfire-prone forestland, lost its coverage from State Farm after wildfires ravaged the region six years ago. Despite California’s “insurer of last resort” plan designed to protect high-risk properties, Whyte has found herself excluded simply because her crop is cannabis.
This predicament is becoming increasingly common for cannabis growers in the famed Emerald Triangle, encompassing Humboldt, Mendocino, and Trinity Counties. Although California legalized recreational marijuana in 2016, cannabis farmers already face steep challenges in finding insurance due to the federal ban on marijuana. With major insurers pulling back from California because of wildfire risks, cannabis growers are now confronting the possibility of devastating losses without coverage.
Whyte, whose farm produces up to 1,600 pounds of marijuana annually, relies on “water pumps and a strong dose of bravery” to safeguard her property. “It puts cultivators and small rural businesses at serious risk,” she noted while walking through rows of cannabis plants.
California’s fire season, propelled by hot and dry conditions, has already burned nearly one million acres this year, leading to evacuations and the destruction of over 1,500 structures. While temperatures are beginning to cool, the wildfire threat persists well into late fall, particularly concerning for cannabis farmers whose crops are vulnerable and ineligible for state insurance programs.
Under the state’s Fair Access to Insurance Requirements (FAIR) plan, coverage is denied to properties involved in “illegal activities,” including cannabis cultivation due to its federal status. As a result, many small growers are left with two risky options: forgo insurance altogether or conceal their operations from insurers—a choice that could lead to lawsuits or coverage loss. This dilemma poses a serious crisis for California’s $5 billion cannabis industry, already burdened by competition, falling wholesale prices, and regulatory challenges.
“I’m surprised the FAIR plan isn’t providing insurance for properties where cannabis is legally grown,” said former insurance commissioner Dave Jones. He believes the current insurance commissioner has the authority to overturn these restrictions and mandate coverage. However, Michael Soller, a spokesperson for the Department of Insurance, declined to comment on whether the commissioner would take such action, noting, “This issue is far more complex than it appears.”
The FAIR plan’s exposure has surged to nearly $400 billion as of June 30, reflecting a 40% increase in the past year. The state insurance commissioner recently extended coverage to higher-value properties but has stopped short of mandating coverage for cannabis farms. “Given the financial constraints, it’s understandable that the plan is cautious about extending this coverage to the cannabis industry,” said Karl Susman, an insurance agency owner.
The situation is further complicated by the reality that most cannabis in California is grown on small, family-owned farms, which now face not only industry pressures but also mounting risks from natural disasters. A study from the University of California at Berkeley’s Cannabis Research Center found that cannabis crops are more prone to wildfire damage due to their geographic location. Wildfires and smoke exposure in 2020 and 2021 alone caused $2.4 billion in losses for the cannabis industry.
Insurance options for cannabis growers are already limited. Major insurers often refuse to work with the industry because marijuana remains illegal at the federal level. For those that do offer coverage, premiums are significantly higher, and insurers often demand comprehensive policies that go beyond basic fire insurance. “You’ve basically got a three-edged sword against farmers in this industry,” said Karl Susman.
For growers like Jacob Soutsos in Trinity County, the situation has been dire. His family lost their home to a fire in 2017. Although they received a partial insurance payout, an investigation into his cannabis operation—located in a separate building not covered by the FAIR plan—resulted in a loss of coverage. Following a lengthy lawsuit, his parents were forced to file for bankruptcy, sacrificing their savings to rebuild a smaller home. Soutsos has since shuttered his cannabis business in hopes of finding easier insurance terms. “I’m not pursuing this anymore. Protecting our property is now the priority,” he said.
Soutsos’ experience has led other farmers in the area to hide their cannabis operations to maintain their insurance coverage, which is fraught with risks. One anonymous Trinity County farmer admitted, “I know it’s probably some kind of fraud, but I can’t risk losing my insurance.” These farmers often pay for damages out-of-pocket rather than file claims, fearing exposure could lead to a lawsuit or coverage cancellation.
Experts point out that while insurers cite potential chemical exposure, fire, and crime as reasons for denying cannabis-related coverage, many of these concerns are overblown. “Insurance companies are in the business of managing risk, yet they often refuse to cover cannabis operations to avoid potential complications,” said Aaron Pelley, a legal expert with experience in cannabis industry representation.
As California’s fire season intensifies, growers like Whyte are left to fend for themselves. With water reserves and defensible space around her property, she’s doing everything possible to mitigate the risks. “We can’t just pack up and leave. We have to protect what we’ve built,” she said.
