RISK MANAGEMENT & INSURANCE MATTERS
I recently went in search of credible evidence to support the folklore pertaining to Cannabis being found on the grave of the undisputed ‘wisest man on earth’, King Solomon. Voila! I came across information about a 2006 excavation in Jerusalem, which revealed a quantity of whole Cannabis plants, unearthed, from what scientists believe, is King Solomon’s tomb in Mount Zion. Not only does this add weight to the growing body of evidence that biblical folk used Cannabis for its psychoactive properties and their rituals, it joins the dots all the way along the Solomonic Line, started when Queen Makeda begat (I love that word!) a son with King Solomon, Menelik I. It is a lineage traced to Emperor Haile Selassie I, icon of the Rastafari faith.
I say all of this, not because these historical facts relating to my namesakes form the rationale for my natural evolution into the area of managing risks and securing insurance protection for the famed sacred plant and its byproducts, but because it certainly makes for a good introduction n’est pas/nuh true?
Anyway, a group of archaeologists, led by a Hongen Jiang (University of the Chinese Academy of Sciences), discovered thirteen (13) Cannabis plants that were still largely intact after millennia underground. “In a first for funerary marijuana, the plants were found lying like a burial shroud atop the body of a man who had died in his early-80s. Their roots lay below the man’s hips and the tips — which had been trimmed to remove the flowers — extended up around his face”. So it seems the hallowed herb didn’t merely grow on Solomon’s grave…he was wrapped from head to toe in it! Clearly not a ‘buck up’ as we would say.
My fascination with the cannabis plant didn’t start yesterday. Having had close and longstanding ties with members of the UK and then Jamaican Rastafarian communities, my ‘overstanding’ of the sacramental use of Cannabis has naturally given rise to a foundation knowledge of and sincere respect for the sacred herb. Previous Blogs have made mention of dear naturopath and energy healing friends that have shared their knowledge and wisdom relating to the natural healing capabilities of our bodies, endocannabinoid system and its inbuilt receptors for Cannabis. One might say that in addition to The Almighty including the Cannabis plant in the fauna of our lands, we were also intricately wired to receive its benefits as part of our natural healing. I don’t want to get too med-tech here, so feel free to research further for greater understanding.
In spite of my 37 years in the Risk Management and Insurance industry (UK & Jamaica), I have maintained a characteristic penchant for seeking out holistic, outside the box solutions to a diverse range of problems. Could be my ENFP personality type…perhaps? So, rather than winding down for (very early) retirement, the buzz surrounding the Cannabis industry worldwide has inspired me to re-saddle, seat up and invest my professional expertise in this growing market. Pun intended.
Licensed Cannabis retailers, cultivators/processors, distributors and vertically integrated organisations in the Jamaican marketplace have been my first point of service focus, however, the whole world will be on the ganja train in the not too distant future, so I predict a growing demand for RM & insurance specialists to guide the multitudes, many of whom are new to the world of business, much less its risks. Even the British Government has loosened its stiff upper lip, adding Cannabis to the pharmacopoeia of medicines available to patients on the National Health Service (NHS), effective 1st November 2018!
WHAT IS RISK MANAGEMENT?
Let me back up a little. Risk Management, in simple terms, is the comprehensive identification of risks a particular operation/business is exposed to, the implementation of preventative/mitigating measures (where possible), the consideration of risk absorption/self-funding, then the appropriate transfer of risks that could severely impact the business e.g. through insurance placements. The formula may sound simple enough (or was so totally boring that you tuned out), but from my experience, organisations guided through the process by a seasoned professional in the field, run less risk of missing exposures to risks that might be right under their noses. The proverbial ‘wood for the trees’. My further caution at this point is for the engagement of a holistically steered, technically competent, yet creatively inspired practitioner that operates beyond the ticking of boxes. Do! One that both knows what to look for and what (sometimes) ‘silly’ questions to ask. The Cannabis industry takes us all into brand new pastures…let’s not do this by rote.
RISK MANAGEMENT EVOLUTION
I cut my teeth in the discipline of Risk Management by force to be honest. It was during the Local Government Risk Management revolution in England (90’s), when authorities across the country were ‘forced’ to find better solutions to ‘ground up’ insurance programmes, through a monopolistic insurance provider, MMI (Municipal Mutual Insurance), which finally went belly up. It was simple maths, the annually escalating premium costs couldn’t keep pace with the minefield of legal claims that were emerging in the borough councils. The sexual abuse of children in the Social Services care homes was one particular risk explosion that changed the local government insurance landscape. I was already in the hot seat as an Insurance Officer when the decree to introduce the brand new concept to thousands of departmental directors and staff was passed. Overnight (well, after specialist training), we emerged as Risk Managers & Insurance Officers, charged with spreading the gospel of Risk Management to sometimes reluctant heads of Education, Social Services, Leisure, Environmental Health, Housing, Highways etc. departments. All with their very diverse services and peculiar risk exposures. Some insurance officers panicked, but the adventure-freak in me dived right in and was excited to ride the new Risk Management wave. It was no longer business as usual.
CANNABIS RISK MANAGEMENT
The fundamental principles of Risk Management will of course apply to the Cannabis industry as they do with most others, however, the newness of so many players to the differentially legislated sector, means that unprecedented risk exposures (that will continue to evolve) must be identified and holistically viewed, to plug any gaps in security, best practice processes/international standards e.g. G.A.P., protection and in due course, insurance.
It is imperative that the usual parameters of Risk Management review are set down and expanded to incorporate all risk possibilities, including Physical, Financial (Pecuniary), Legislative, Human and Energetic…yes, ENERGETIC. We are after all dealing with a natural living plant that will be transformed to support the health of natural living human beings…both energetically comprised and potentially compromised.
Newcomers to the industry, unless it is critical or compulsory, insurance policies should ideally be considered after a thorough survey, meetings with key stakeholders and the establishment of your risk tolerance levels. It’s not wise to put an-off-the-shelf policy in place without determining its suitability for your peculiar exposures. The insurance sector worldwide has, to be honest, tended to move at dinosaur pace in regards to modernising scopes of policy covers over the years, preferring to stay closer to the Lloyds Coffee Shop (embryonic birthplace of our insurance industry) models of policy wording. An opportunity now presents itself for forward thinking insurers to underwrite more creatively tailored polices for the Cannabis businesses mushrooming around the globe. Take the risk!
WHO ARE THE JAMAICAN PLAYERS?
Currently in Jamaica, the main licensed players include persons/companies in the categories of Cannabis growers, manufacturers, dispensers, researchers, medical practitioners distributors/exporters. Other legally recognised players are for another story. Each branch of the sector comes with its own particular risks, which must be carefully and methodically explored. Tracking the journey from the seed to the consumer across company divides and multiple processes, means that a bird’s eye view is needed to weed out (sorry) contractual overlaps and fill gaps in risk responsibilities.
LET’S LOOK AT JUST ONE OF THE RISK AREAS…CYBER RISKS!
Dispensaries: The cannabis industry, like so many others, utilises technological systems to support operations in a number of areas e.g. POS (Point of Sale) or ERP (Enterprise Resource Planning).
Regardless of the safeguards built into your systems, there is always a clever youngster somewhere that has reached the peak of their cyber hacking career and is looking for greener pastures. Along comes the lucrative Cannabis industry. Reports in the US market of some pretty serious cyber hacking situations are a cause for concern. Just ask MJ Freeway, a company recently subjected to an attack that caused two weeks of server outage. Breaches in your cyber-defenses can arise through a number of channels, affecting areas as unexpected as transportation and delivery information.
Robust cybersecurity is a must as a preventative measure, though insurance covers for the aftermath of those unstoppable hacks, may be needed. These cyber-ninjas are proliferating at a rapid rate, with each new wave of bored genius teenagers.
What if one of these youngsters could shut down the most vulnerable part of your Cannabis retail system? They might change prices through your POS system. Or ask your system provider to talk you through the levels of security they have in place to protect your data, their servers, and the privacy of your patients.
Growers: Whether you are a grower only or a Cannabis dispensary that has vertically structured to grow your own cannabis, don’t be naïve. Your systems can be breached directly or even indirectly via other operational seemingly obscure systems. Case: Target’s POS system was breached through its HVAC system (the store’s heating and cooling system). Through that network the cheeky hacker gained access to the store’s POS system and consequently customer information. Imagine one of your competitors hiring hackers to mess up the heating/cooling/lighting settings within your operations, destroying your crop by throwing off the delicate growing cycle. Ok, don’t imagine it; just make a mental note to tighten up cyber controls where you can. I mentioned your competitors, but you might find an internal team member that decides they have a beef (tofu, for my fellow vegetarians) with you and throws the proverbial spanner in the networks.
Bottom line, ensure your systems are optimally protected and that integrated platforms (that will allow a hacker to hop from one to the other) have equally high levels of cybersecurity, leaving no gaps in the integration process that could leave your information vulnerable.
Access restrictions at varying staff levels is also advisable to minimize infiltration from without and foul play from within. Monthly cybersecurity checks at management level are one way to heighten vigilance in this vast area.
SERVICES OF A CANNABIS RISK MANAGEMENT CONSULTANT
Whether you are in the Cannabis business already or teetering on the brink of jumping in, it’s never too early to start the process of looking at your risk exposures. My mother used to say ‘too late, too late shall be their cry’…I’m not sure where the dramatic phrase came from, but it certainly hastened my steps to cut procrastination and take the relevant course of action. Be proactive in taking your steps towards implementing your Risk Management Programme.
Effectively communicating the philosophy to your team members should also form a part of the Risk Manager’s charge. A persuasive presenter that can break the information down into non-stress inducing levels is key. Buy-in and commitment of all staff is a vitally important Risk mitigation factor, as it only takes one person forgetting to log out of your POS portal, in a public space, to throw your business doors wide open to cyber risks! I’m not trying to scare you in a Trump-esque way, just raise your awareness.
WHAT ABOUT THE OTHER RISKS?
Now I could continue with a list and description of other Cannabis industry risk exposures, but I think it will be more fun if we ‘walk the floor’, then sit together over a coffee or red wine and compile a comprehensive list of risks that face YOU in particular! No two enterprises are exactly alike and the industry is brand new, so why approach the process from a pre-prepared, tick-boxed template? With a clean slated, birds-eye vantage point, we can work together to create the best Risk Management and Insurance solutions for our fledgling Cannabis industry and perhaps your entity in particular.
Whether inspired by the Solomonic connection to the sacred herb or the vast opportunities emerging in the once legal, then illegal, now partially legal Cannabis industry, I am excited to be alive and witnessing the attention being bestowed on the plant that has been called ‘The healing of the nation’. Evidence now points to the fact that our wise King Solomon, or at the very least the bones of a male from that era and area, was laid to rest in a Cannabis shroud. I trust that the plant will continue to heal minds, bodies and elevate the souls of humankind. Finally, may social conscience lead (or ‘jook’) those positioned to benefit financially from the Jamaican market, so that they will pay homage and due regard to the stalwart farmers that kept the Jamaican Cannabis flag flying high over the years. Take it from me, there is enough room for all to ‘eat a food’.
C. MAKEDA SOLOMON ACII, CIP
CANNABIS RISK MANAGEMENT & INSURANCE CONSULTANT