Lloyd’s open to write Canadian cannabis risks
Lloyd’s said that after taking specialist advice it believes that Lloyd’s underwriters are well positioned to write Canadian cannabis business subject to compliance with local Canadian requirements.
It will be legal to produce, distribute, sell and possess cannabis in Canada from Oct. 17, 2018, subject to complying with the provisions of the Canadian Cannabis Act. Lloyd’s anticipates that this legalisation of cannabis related activities will give rise to new opportunities for insurers considering writing related risks.
As cannabis remains a Class B drug in the UK, Lloyd’s has considered whether Part 7 of the Proceeds of Crime Act 2002 (POCA) is engaged by underwriters providing insurance cover in Canada. It is recognised by Lloyd’s that the production etc. of cannabis in Canada could be said to be “proscribed conduct” under POCA. This raises the question whether providing cannabis related insurance could result in an offence under POCA, notwithstanding that the underlying risks have been legalised in Canada.
Providing insurance for Canadian cannabis risks would not amount, in the circumstances under consideration, to entering into, or becoming concerned in, an arrangement which facilitates the acquisition, retention, use or control of criminal property by another person thereby breaching section 328 POCA, according to Lloyd’s.
Neither POCA – nor any of its statutory predecessors – was designed to bring wholly lawful conduct such as the provision of insurance of business activity carefully legalised in another country, into its scope, Lloyd’s explained.
Lloyd’s will therefore consider the writing of Canadian cannabis business by syndicates at Lloyd’s as part of the usual business planning process.
Lloyd’s noted that managing agents will be required to demonstrate an appropriate understanding of the Canadian Cannabis Act to ensure compliance with all local laws. In case of any question regarding the legality of accepting any particular risk, either under UK or Canadian laws, managing agents will be required to obtain appropriate legal advice, it added.
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