Berkshire Hathaway Insurer and Cannabis Company Clash Over $1.3 Million Claim

A fire in February 2020 at a cannabis growing facility operated by Connecticut-based Theraplant has led to a contentious legal dispute with its insurer, National Fire and Marine Insurance Co., a Berkshire Hathaway company. The fire, caused by an exploding lamp, damaged a flowering room and resulted in a 68-day suspension of operations. Theraplant claims a business income loss of $1.3 million due to the inability to use the fire-damaged room and equipment. The insurer, however, denies the claim, asserting that the policy only covers business income loss caused by a suspension of operations, not damage to marijuana plants, which are excluded from coverage.

Theraplant argues that their loss was due to the operational suspension, not the crop damage, and that the policy does not require the revenue loss to occur within the period of restoration. National Fire contends that any alleged losses stemmed from the inability to sell products derived from the damaged plants and that these products would not have been sold until months after the fire. The insurer also highlights a policy provision limiting monthly business income payouts, further complicating the claim.

The parties have filed summary judgment motions in federal court, each seeking a ruling in their favor. The outcome will hinge on the interpretation of policy terms and whether the revenue loss was truly due to the suspension of operations or the excluded crop damage.