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Takeaways from Our Conversation on Captives for Cannabis

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Want further proof the cannabis industry is no longer the “red-headed stepchild” it is too often viewed as? Just ask TJ Frost?

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Frost is president of Symphony Grow, which recently launched a captive program that Frost seed as evidence that the industry has arrived – it’s reached a point of maturity and respect.

For our latest Insuring Cannabis podcast, we spoke with Frost about the program, what sort of companies they are targeting, and why he thinks the program will grow.

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Frost was asked why he thinks now is the time for cannabis captives.

TJ Frost

“The cannabis insurance sector has always been treated kind of like a red headed stepchild. Right? It’s a lot of secondary markets, surplus lines, and, traditionally, they’ve never been or had access to captives or standard markets for the most part,” Frost said.

Frost said their captive programs are targeting most businesses, including multistate operators, despite the spate of news about MSOs struggling as the industry goes through some tougher times in the more mature states.

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“MSOs will see a greater benefit to starting the captive right away,” he said. “Traditionally, MSOs spend a significant amount of money in insurance. And the more money you spend, the more a captive makes sense for them.”

He added: “They get to control their risk. They get to control their claims. And it takes the spend of insurance premium from a debt to an asset on a balance sheet. So, they get to see great benefits from in being in and owning their own captive.”

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MSOs and publicly traded companies have used the firm’s single parent captive the most.

The firm is working on a group captive they expect to launch over the summer, and they are formulating a plan for segregated cell captives.

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“So, we’ve already seen a great deal of success, and we’re going to end the year a great deal of captives launched for this industry,” he said. “We project over the next 24 to 36 months. This is going to be the new path that these companies are going to go down.”

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