Confronting security challenges posed by legalized marijuana

Following the legalization of recreational marijuana use by voters in Washington and Colorado in 2012, there has been a proverbial avalanche of companies looking to capitalize on the lucrative cannabis industry, including security technology installers and guard services providers. The need for security at medical and recreational marijuana dispensaries is huge given the fact that the industry is a virtually all-cash business. Because marijuana is still a schedule1 substance under federal law, banks have pretty much refused to do business with pot dispensaries, despite the fact they may be perfectly legal within the jurisdictions where they operate.

With that being said, there is still a large contingent of security companies that want to ride this wave with the legal dispensaries in the aforementioned states, as well as the other places where the drug has been approved for medicinal purposes. Thus far, 20 states, including the District of Columbia, have approved the use of medicinal marijuana. And, as is the case in Washington and Colorado, dispensaries in these states need a host of security services to keep their facilities, customers and employees safe.

In an effort to provide guidance on the issue of legalized marijuana and its’ impact on the security industry, an educational session was held at ASIS 2014 on Tuesday featuring speakers from across the spectrum including; James Burke and Elizabeth Ho Sing, attorneys with the law firm of Wilson Elser Moskowitz Edelman & Dicker, LLP; Eugene Ferraro, CPP, chief ethics officer, Convercent; and, Taylor Brownyard Guercio with Brownyard Programs, which provides insurance policies for companies involved in the security industry.

According to statistics, marijuana is the mostly widely used illegal drug in the U.S. In fact, 30 million Americans admitted to using pot in a 2010 survey, while yet another study found that between 124 and 300 million people reporting using pot every year.  Despite this fact, both insurance companies and courts are behind the curve when it comes to writing policies and enforcing the law respectively.

“The companies (that provide security for the marijuana industry) need to understand the risks,” Ho Sing told attendees during the session.

Among the security challenges posed by the burgeoning cannabis industry, according to Burke, include dealing with a wide variety of issues not routinely encountered in the day-to-day duties of a typical security officer such as:

• Cash only business
• Large volume sales
• Violent crimes of opportunity
• Potential involvement by organized crime
• Emotionally disturbed persons including codependent narcotics/alcohol abusers

“You, as a security company, are going to face emotionally disturbed persons and codependents,” said Burke, who added that companies shouldn’t buy into the “nonsense” that marijuana isn’t as bad as some of the other substances on the schedule 1 list.

Guercio, whose company writes insurance policies for the guard industry, said that the issue of legalized marijuana use has “become a daily conversation” in her office. The good news, according to Guercio, is that recent legislation enacted in the state of Washington is helping to provide a framework for things that are required of businesses that want to operate in this industry.

For example, Guercio said that any recreational marijuana facility in Washington is required to carry $1 million in minimum coverage and that all insurance companies underwriting policies for marijuana businesses in the state must be rated A- or better.

When it comes to mitigating against the risks posed by providing security for companies involved in the “legal” drug trade, Burke said that there are a few things that security firms need to take into consideration including:

• Training – how to deal with emotionally disturbed persons, isolating and containing the zone of danger, and having absolute minimum use of force policies.
• Must knows – guards need to do more than just call 911 under certain conditions, as well as have the location and contact information of the nearest hospital and ambulance company.
• Reporting child abuse/endangerment by patrons of a licensed premises
• Having clear and unequivocal post orders
• Adopting insurance coverage that meets the risk of providing services at licensed facilities

Burke added that companies also need to be mindful of contractual provisions that require indemnification of a premise owner/operator and that require broad-based, additional insured status.

“For God’s sake, be prepared and have the training,” added Burke.

Burke and Ho Sing also emphasized the importance of keeping accurate and detailed records, so that in the event an incident occurs, a security provider can exonerate themselves from culpability. This means recording the names and contact information of witnesses, injured persons, victims, responding emergency personnel and even police officers.  Both Ho Sing and Burke said that they have worked on cases where the recorded statements of witnesses have proved to be key in flipping cases in favor of their clients.