The Importance of Cannabis Insurance Brokers: Expertise, Advocacy, and Transparency Eric Schneider, the managing director at Alpha Ru, discusses the importance of having a broker when obtaining insurance for cannabis companies. He highlights the specialized nature of the industry, the need for brokers with expertise in cannabis, and the role of brokers as advocates for their clients. Schneider emphasizes transparency, storytelling, and the value of broker relationships with insurance companies. He also mentions that Alpha Ru was acquired by Baldwin Risk Partners and clarifies that they are not currently raising capital. Alpharoot - https://alpharoot.com/ Eric Schneider - https://www.linkedin.com/in/ericschneider5690/ Baldwin Risk Partners - https://baldwinriskpartners.com/
The Importance of Cannabis Insurance Brokers: Expertise, Advocacy, and Transparency
Eric Schneider, the managing director at Alpha Ru, joins Dan Humiston to discuss the importance of having a broker when obtaining insurance for cannabis companies. He highlights the specialized nature of the industry, the need for brokers with expertise in cannabis, and the role of brokers as advocates for their clients. Schneider emphasizes transparency, storytelling, and the value of broker relationships with insurance companies. He also mentions that Alpha Ru was acquired by Baldwin Risk Partners
MJBulls - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Alpharoot - https://alpharoot.com/
Eric Schneider - https://www.linkedin.com/in/ericschneider5690/
Baldwin Risk Partners - https://baldwinriskpartners.com/
Recorded on Squadcast - https://squadcast.fm/
[00:00:00] Today I'm the MJ Bulls Raising Cannabis Capital podcast. We are joined by Eric Schneider, the managing director at Alpha Ru, and the host of Route to Risk Podcast. Eric, welcome to the show.
Thanks for having me. I really appreciate it.
Well, it's great to have another podcaster here. , I love interviewing podcasters cuz you know, the jury know the drill. And I really appreciate you being here. When most people think of brokers, they normally picture this like middle man. That's like not necessary. And, and, but when it comes to cannabis You really need a broker when it comes to cannabis and as, as one of the leading cannabis industry, insurance brokers.
You guys have, can you know more experience at this than anybody? Let's start off there. Especially cannabis, why is that so important to have a broker representing you when it comes to getting insurance for your company?
Yeah, no, that's a great question. And, and it, it's [00:01:00] funny because the commercial insurance space in general is, is very different than what people experience, as a, as a consumer. Right. When you're getting your own personal auto insurance, you may just go direct to Geico or State Farm. The commercial insurance space is, is much more nuanced and you, you typically need a broker representation to go. And get access to these certain carriers. And so it's, it's a little bit different that way in that businesses cannot a lot of times go directly to an insurance company. There are like a few markets that will allow it, like the Hartford and Chub and Travelers and much larger insurance companies.
But those carriers are not gonna write a cannabis business. And what's really, what's really important is, and, and I find in insurance in general, you typically either specialize in a specific product or a specific industry. And I think it's really important, especially in the cannabis space because of how [00:02:00] nuanced.
The industry is right when you look at the regulatory framework and how things are constantly evolving, right? Newer states coming online, newer regulations coming out, newer requirements. And so if you're not constantly involved in the space keeping up to date what's currently happening, it's gonna be really challenging, I think, to to have success and to be able to put your clients in the best position to be successful. And then also, in addition to specializing in the cannabis space to just build out our network in that area. Also on the carrier side. There's very specific insurance companies that write this class of business, right? And so part of what my, actually, my business partner, Isaac, what his real role is, is focusing on carrier partnerships and making sure that we have access to all the insurance companies that can write aggressively in this space, right?
Because. If we have all the clients in the world, but we don't have access [00:03:00] to the best in class products, it doesn't matter, and then vice versa. So you need both sides of the coin in order to really create, a, a quality brokerage in the cannabis space. And so by us really. Focusing in it exclusively coming up on, four years now, we've been able to really build quality relationships on the carrier side which is, really put our clients in, in the best position to be successful and have, best in class insurance products within their portfolio.
Yeah, I, I think it makes a lot of sense and I think sometimes people lose sight of the fact that you're their advocate, like you're working for them and , let's use for an example off directors and officers insurance. I wouldn't even know where to begin. Like if you, if I was like, what do I, what's standard?
Like how do I protect myself? That's why I want somebody like you, an expert that can go, this is a good deal. This is a terrible deal. , I think that's really important that our listeners understand that, that you're there on their behalf. You're fighting for [00:04:00] them every step of the way, right.
Absolutely. Like we're, we're their conduit to their story, right? Like, we're storytellers. And so we're taking that risk, that exposure from an application. And through our due diligence, understanding what they have in the pipeline for the next 12 months. And we're communicating that to the market, right?
And trying to advocate on our client's behalf to get the best rates. And the value of working with us is like when you go to, let's say for example, purposes like a Geico, right? That, and you're working with an agent, there's a, there's a big difference between an insurance agent and a broker. And an agent can only sell a product. From that specific company, right? So a Geico agent can only sell Geico products, whereas working with us as a broker, we have access to multiple different markets simultaneously with that single application. So then we're able to create leverage. And negotiate on behalf of our clients, right? So when we get one quote back, [00:05:00] maybe we have an indication that's higher and we say, Hey, look, X, Y, z carrier quoted at this level, they're offering these terms.
What can you do here to be competitive? And so that's all what's happening on the, the background, and that's where true brokering. Is done. Right. And that's, and that's where we add our value. And especially on certain products like directors and officers insurance, which can be very, very expensive in the cannabis space, especially for plant touching companies given the, the regulatory exposure, especially if you're a public operator.
Right. And. There's a lot of nuances to that as well because with public operators, you actually have to place, typically the d and o policy in Canada because that's where the holding company is situated. Because due to the regulatory framework, if you're a plant touching business in the United States, you can't be listed on the New York Stock Exchange and the nasdaq.
So a lot of companies, they go public via the CSE or the tsx, and then they do a list on the otc. And so [00:06:00] there's a lot of. Different nuances that come with that placement. And so working with us, we're really there to take that burden off of your plate. Right? We, we obviously need information in the form of an application in order to be able to go out to what we call market.
We say go to market, meaning that's us reaching out to different insurance companies to look at getting multiple quotes back and then, What we also try to provide, and, and I think a big stigma with insurance is just transparency, right? And, and that's why people, the, the biggest term is shopping, right? I want to shop around and we hear it all the time.
And, and I think there's just a big misnomer and, and what we try to do is to create a level of transparency with our clients so that they feel comfortable and confident that they are getting the best product for their business. And, and how we do that is we'll provide a marketing report that shows, Hey, look, we received, Two to three options. are all the other insurance companies that we reached out to. [00:07:00] This was their response. Maybe they declined because they're not super competitive in that state. They couldn't be competitive on pricing. They declined because of X, Y, Z reasons within the business. And so then we're able to show, hey, we received these three options.
This is what we recommend. These other two options. This is why, they're on a below tier, maybe they, are more expensive, have you know more. Limiting exclusions, but then also on the other side it's like, Hey, look, we also did reach out to, 10 to 15 other insurance companies.
They just weren't willing to, to play ball. And I think that's really important for our clients, for them to feel comfortable, like, okay, I know that this is the best option for me. And a big misnomer is that I need to work with multiple brokers to get multiple quotes.
Yeah.
It's not the case. And, and actually what that causes a lot of times is, a, a bad reputation for the insured.
And this is something that we really try to do with our clients and being transparent and upfront is like, If [00:08:00] we get a submission and we go to, for example, purposes, I'll say The Hartford, right? And then another client gives that same submission to another broker and wanting to get quotes, and that other broker goes to The Hartford.
After we've already approached them, the Hartford's gonna say, sorry, other broker, we're already working with Alfa Root here. And in order for you to be able to gain access to The Hartford you need to what's called sign a broker of record letter, which basically removes Alfa route out of the equation and gives that other broker access.
Cuz you can't have two different insurance brokers occupy one carrier
I
a time. So, and what happens is, is that insurance companies, a lot of times, We've seen it where companies are like, well, I'm shopping around to three to five brokers. And then those brokers take the same application, they send it to the same markets, and then at the end of the day, the, the only person that really suffers from that is the insured, right?
Because [00:09:00] the insurance companies get frustrated, they want long-term partnerships and they don't wanna work with people that see it as very transactional. And so what we try to do is alleviate that. That inner stress of, I need to make sure I'm getting the best price for my business because we understand that insurance at the end of the day, is a very important aspect of the business.
It oftentimes is not at the forefront of of operator's mind, but it really is important for companies to have, a strategic partner in place so that they can grow and scale their business knowing that they have something in place in the form of risk management. To mitigate any sort of downside whether it's a claim, whether it's a liability claim or, property damage, property loss and, and making sure that they can scale effectively, and not be uninsured.
Yeah, it makes a lot of sense. I love Beck. One of [00:10:00] the first things you said though was , you tell this story, you tell your customer's story to the different brokers, I mean, that's, that's the real key right here, especially in cannabis, because like you said, it's very nuanced and every, every state's different.
Some municipalities are different, and the companies that operate within those all have their own story and somebody needs to tell 'em. It's not one size fits all. And I think that's, that's the key to this what you're doing., we're cutting it close on time, but I always wanna ask, When you think of cannabis businesses, most people immediately go to dispensaries and they go to grow facilities and, and they forget about sort of the nuts and bolts as you referred to picks and shovels of the industry in which you guys are one of the insurance. That's like one of the foundational of all businesses.
I, it just seems like such a great investment. If you were a a person that's in looking to invest money, those would be the type of businesses that you'd wanna get into cuz they're just steady, nice dividends every year.[00:11:00] So I asked this about everybody. Is, is is Alpha Ru a company that's gonna be raising money or there opportunities for investors to get involved with Alpha Root?
There, there's opportunities to get involved in the form of investment, but we're, we're not directly raising capital right now. We were actually acquired back in 2021 by a, a much larger publicly traded brokerage firm called Baldwin Risk Partners. They're actually traded on the Nasdaq the.
The ticker symbols, b r p and us in addition to our sister company Founder Shield that we actually rolled out of me and my partner Isaac were early stage employees at Founder Shield which focused on emerging industries and emerging technologies, and that was really like our core specialization and obviously, Cannabis was, was a big part of that in the form of emerging industries.
But we decided to roll out Alpha Root because it's, it's very nuanced and specialized outside of any other industry that I've worked in. And it, and it [00:12:00] requires really hard earned knowledge to be able to tell those stories effectively to our carrier partners and make sure that we're articulating the risk appropriately.
And so, Ourselves and founders who were actually acquired in 2021 to to build out the emerging risks arm of, of Baldwin Risk Partners. So they're a publicly traded organization. You could buy B R P stock. But we're not directly raising capital at this moment.
Well, you know what? It's good. It's a really good sign though, when you see the. Mainstream businesses identifying the opportunities in cannabis and making the, the investment. I mean, they, they said, like you said, they acquired you. That's a great sign for the rest of the industry that these things are happening.
They're happening on a regular basis. And, and it's just, it's just one more example of this industry being legitimized and we're gonna have. All of alpha root's information in the show notes , and we have Eric's information in the show notes.[00:13:00] , we'll also put the stock, your stock symbol in, in the show notes too.
So if somebody wants to, hey, get a, get a, an opportunity to invest. That's a super simple way of doing it. Eric. This is good stuff. I'm glad you, I'm glad I had you on the show today. I really appreciate you taking the time to explain all this to us and let's, let's plan to do this again. Thanks for doing this today.
Absolutely Dan, thanks for having me and, and really appreciate the time.