When his tire-chip manufacturing business was shut down by the state a decade ago due to an improper storage allegation — a claim he is still fighting — he started work in a boiler room and retreated to a patch of land in Glenville he was allowed to keep through bankruptcy. He grew hay, and later planted crops like tomatoes and corn. In 2020, Conlon and his girlfriend Betsy Burrill took a leap and started what they thought would be a lucrative use of their small plot: hemp cultivation.
But the pair had started on hemp at just the wrong time, and with a flooded market in New York, they had trouble finding any processor who could pay for their ample, pungent crop. Then, this past winter, Conlon was watching the news when he heard Gov. Kathy Hochul announce that current hemp farmers would get the state’s first conditional licenses to grow cannabis for recreational use.
“I looked at my girlfriend and I said, ‘That’s us!'” the 65-year-old said. “I Googled all this stuff, tried to figure out what was going on. It’s been just running since then.”
Licensed cultivators can currently grow up to an acre of flowering canopy outdoors, or 25,000 square feet in a greenhouse. The state awarded 242 such licenses earlier this year. In the four-county Capital Region, there are 18 licensed operators: four in Schenectady and Albany counties, seven in Saratoga County and three in Rensselaer County.
The cultivators won’t be able to sell their wares to consumers — no farmers’ market sales for Conlon — but will instead sell the crop to a processor, many of whom are also currently waiting for conditional licenses from the state.
In spite of that small coverage area, farmers needed to step up their security protocols due to the high value of each plant: Conlon installed a locking fence and a 360-degree camera that he and Burrill have been monitoring non-stop — especially now that they’re only two or three weeks from harvest.
“It’s a very expensive crop to grow, a very specialized crop,” explained David Denniston, who works as director of risk management at McNeil & Company, a New York-based insurance firm that specializes in underwriting misunderstood classes of business. “The potential is there for being able to make a profit at the end of the day, but there’s also a potential that things could go wrong in a hurry.”
McNeil & Company has been working with the Cannabis Association of New York (CANY) to put together plans that the state’s first recreational cultivators, processors and dispensaries can take advantage of, starting with the required workers’ compensation insurance for employees.
But with the size of the plots that cultivators like Conlon have started with, there hasn’t been a stampede for any sort of traditional business insurance.
“I know a number of farmers who have obtained these early conditional cultivation licenses whose families are just handling the cannabis themselves,” said Dan Livingston, the executive director of CANY. “They’re just doing it by the seat of their pants.”
Conlon saw firsthand how quickly the crop could go awry. After spending $17,000 of his own money on a set of 20,000 seeds for quick-growing “autoflower” plants and sprouting them in a converted shipping container on his property, he and Burrill had family over to help get the seedlings into the ground on Memorial Day. But one day later, the temperature climbed above 90 degrees, and all but a few of the delicate shoots were dead.
“That happens; farms lose,” Conlon said, adding that that’s why crop insurance exists. But his own batch of plants was not protected: For such a small plot, he hadn’t looked it up. “I don’t even know if I could have had crop insurance, because crop insurance is a federal plan,” he said.
Since high-THC cannabis is still federally illegal, typical insurance programs available for other crops through the federal government don’t extend to the plant.
Charles Pyfrom, an executive at CannGen Insurance Services, said his company sells plans in various states that do cover cannabis plants grown indoors. But while the company will write insurance for outdoor grows, those policies “routinely will not cover the living plants themselves.”
While CannGen and McNeil are both operating in the cannabis insurance space, many of the big, recognizable names are staying out for now. Tim Braunstein, an insurance agent for Keats — another upstart operation in the emerging space — explained that it’s a risk many of the “Nationwides of the world” can’t take on.
“The biggest reason is because of the federal legality issue, they actually can’t participate,” Braunstein said. “Otherwise they risk their assets being frozen and seized by the federal government. So it’s all niche insurers who are domiciled in legalized states.”
Some agents, like Marshall & Sterling’s Ken Grey, are used to navigating other types of business insurance for the Capital Region. They’ve made an effort to get to know which underwriters are willing to dabble in this new space. But they already see the pricing questions and knowledge gaps.
“On my last read, there’s under 10 big carriers that are really aggressive in the cannabis industry,” Grey said. “Not having a plentiful database that’s exchanged between states limits the comfort level for insurance companies to underwrite the risk. And so they go to the reinsurers — the people who insure the insurance companies — and they’re also reluctant.”
All of these factors drive up the cost of a given insurance plan, and impact whether small-plot farmers like Conlon and Burrill can afford it.
In Conlon’s case, he swallowed the $17,000 cost of his first lost crop, which he’d self-funded from savings, chalking it up to experience. He and Burrill tried again, this time staying away from the sensitive autoflower plants but still germinating another $6,000 worth of seeds, which they got into the ground on June 16.
They have over 15,000 healthy plants, which they watched like hawks from day one. And when they saw this new batch bending over from the elements, they sprung into action.
“We took coconut coir” — a growing medium popular in hydroponic farming — “and made like a little volcano around each plant just to cover it up,” Conlon said, adding that they laid down a new irrigation system to ward against more hot days.
Burrill was in charge of tagging each individual plant with a unique number and its strain, either “Papa Smurph” or “Banjo X Cotton Candy,” for their current crop. While she “never got into smoking” as a teenager, Burrill has been looking out for the high-risk grow.
“We’re like, ‘Okay, we’ve got to be very careful with this stuff, everybody wants this stuff,'” Burrill said. “So that’s why we have the cameras up and down.”
But in spite of their end-of-season nerves, neither Conlon nor Burrill could stop smiling on Monday as they showed off their towering field with some of the Capital Region’s first legal cannabis plants grown for their THC.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.