California Insurance Commissioner Dave Jones is working to get admitted insurers to write coverage for marijuana providers and distributors within the state.

A proposed regulation, which has since been withdrawn, stipulated that only admitted insurers could write the coverage, said Mr. Jones. But as the insurance department pointed out, the net effect “would have been to preclude the cannabis industry from getting the very insurance it is being asked to get,” he said.

He said there are about 25 surplus lines players now writing marijuana business in the state, but no admitted insurers.

“I believe we will see admitted carriers” writing the business, he said.

“Carriers are very good at assessing and mitigating risk. This industry is going to be heavily regulated by the state of California, and part of what we’re doing is trying to make sure the commercial carriers understand the full scope of those regulations and the degree to which it will be regulated, so they have greater understanding of what their risks actually are.”

“I have not taken a formal position on required coverage,” Mr. Jones said. He said he plans a public meeting on the issue of marijuana coverage later this year.

Hank Haldeman, president of Anaheim, California-based excess and surplus lines broker G.J. Sullivan Co., said, “I don’t think you’re going to see a rush of admitted market participants insuring the marijuana industry in the near future. The one possible exception to that might be insurers that are domiciled here.”