A selective, member-owned captive insurance structure for established cannabis operators seeking greater control over claims, retained underwriting results, and long-term capital formation.
Coverage structured around cannabis operations — not standard carrier exclusions.
Delivered through a fully regulated captive insurance framework.
Claims are funded by the captive members, aligning incentives from the outset.
All claims subject to underwriting approval and claims development.
Excess premium remains within the captive instead of being transferred to a carrier.
Illustrative outcomes depend on loss experience and program performance.
Select Risk Captive is purpose-built for best-in-class operators with disciplined risk management. Participation is limited and subject to underwriting approval.
Established single-state or multi-state cannabis operators Demonstrated loss control or documented risk management practices Leadership teams operating on a 5–10 year horizon
Startups Distressed risks Short-term cost shoppers
The difference is not how much insurance you buy — it is who owns the financial result.
Guaranteed Cost
SRC Captive
Most cannabis operators view insurance as a sunk cost. Best-in-class operators treat it as a long-term financial strategy.
In a traditional guaranteed-cost insurance program, premiums are paid, losses are covered, and any underwriting profit belongs entirely to the carrier. Even when losses are low and risk management is strong, the financial upside never accrues to the insured.
A captive insurance structure changes that equation.
With SRC, qualified members retain ownership of their underwriting results. When losses are well-managed, excess premium is not lost—it is retained, invested, and ultimately returned to the members over time, subject to claims development and program guidelines.
The difference is not how much insurance you buy.
The difference is who owns the result.
Insurance spend is a recurring expense Underwriting profits accrue to the carrier No compounding of retained value No long-term capital formation Insurance spend becomes a risk-financing strategy Underwriting results remain member-owned Capital is invested during claims development Value may compound over time Potential contribution to enterprise valueA key advantage of a captive insurance company is control. In a captive structure, you actively participate in claims management, reserving strategy, and settlement decisions — rather than relying entirely on a traditional insurance carrier’s underwriting and claims philosophy. This alignment between operational leadership and risk management can significantly improve long-term loss performance.
Captive insurance programs also provide flexibility to insure risks that the traditional market may exclude or price aggressively.
Over a multi-year horizon, a captive can shift your strategy from funding a commercial insurer’s profits to building a long-term internal risk financing asset tied directly to your company’s operational performance.
Select Risk Captive is available only to established operators with strong risk discipline.
Insurance isn’t the cost. Ownership is.
Admin Cost: 40%
Examples below demonstrate how different loss experiences may impact underwriting results and projected captive surplus over time.
llustrative only. Not a guarantee of results.
This operator represents a mature, best-in-class cannabis business with disciplined risk management and a strong safety culture. Loss controls are embedded across operations, claims are infrequent, and volatility is minimal. The business operates with a long-term mindset and views insurance as a strategic financial tool rather than a yearly expense.
Claims are paid as losses occur throughout the year. The claims fund is more than sufficient, resulting in meaningful excess premium.
This excess premium remains owned by the captive members, invested while claims mature, and ultimately emerges as retained equity.
| Year | Beginning Balance | Annual Retained | Growth @ 5% | Ending Balance |
|---|---|---|---|---|
| 1 | $0 | $175,000 | $8,750 | $183,750 |
| 2 | $183,750 | $175,000 | $17,938 | $376,688 |
| 3 | $376,688 | $175,000 | $27,584 | $579,272 |
| 4 | $579,272 | $175,000 | $37,214 | $791,486 |
| 5 | $791,486 | $175,000 | $48,074 | $1,014,560 |
≈ $1.06M retained equity (rounded for claims development)
| Year | Ending Balance |
|---|---|
| 6 | $1,240,288 |
| 7 | $1,486,302 |
| 8 | $1,755,117 |
| 9 | $2,049,873 |
| 10 | $2,370,867+ |
≈ $2.7M+ over a full 10-year horizon
Outcome Comparison
| Horizon | Guaranteed-Cost Insurance | SRC Captive |
|---|---|---|
| 5 Years | $0 retained | ~$1.06M retained equity |
| 10 Years | $0 retained | ~$2.7M+ retained equity |
At a 25% loss ratio, SRC converts insurance spend into a multi-million-dollar internal asset. Guaranteed-cost insurance delivers identical claims protection—but no ownership, no compounding, and no retained value.
This operator reflects a typical, well-managed cannabis business. Safety programs are in place, claims occur periodically, and losses remain predictable. While not best-in-class, risk performance is stable and insurable.
Claims are fully funded, and excess premium remains after losses are paid.
This retained amount is invested and compounds over time within the captive.
| Year | Beginning Balance | Annual Retained | Growth @ 5% | Ending Balance |
|---|---|---|---|---|
| 1 | $0 | $125,000 | $6,250 | $131,250 |
| 2 | $131,250 | $125,000 | $13,125 | $269,375 |
| 3 | $269,375 | $125,000 | $19,969 | $414,344 |
| 4 | $414,344 | $125,000 | $26,467 | $565,811 |
| 5 | $565,811 | $125,000 | $34,041 | $724,852 |
≈ $725K retained equity
| Year | Ending Balance |
|---|---|
| 6 | $888,095 |
| 7 | $1,072,500 |
| 8 | $1,281,125 |
| 9 | $1,516,931 |
| 10 | $1,781,778+ |
≈ $2.7M+ over a full 10-year horizon
Outcome Comparison
| Horizon | Guaranteed-Cost Insurance | SRC Captive |
|---|---|---|
| 5 Years | $0 retained | ~$725K retained equity |
| 10 Years | $0 retained | ~$1.9M+ retained equity |
At a 35% loss ratio, SRC still delivers meaningful capital accumulation. Guaranteed-cost insurance produces the same claims outcome—but none of the retained underwriting profit.
This operator experiences higher claims frequency but remains within underwriting expectations. Losses are elevated but manageable, and the business remains insurable within a captive framework.
Claims are paid in full, though less excess premium remains..
Even at this loss level, capital continues to emerge.
| Year | Beginning Balance | Annual Retained | Growth @ 5% | Ending Balance |
|---|---|---|---|---|
| 1 | $0 | $75,000 | $3,750 | $78,750 |
| 2 | $78,750 | $75,000 | $7,875 | $161,625 |
| 3 | $161,625 | $75,000 | $11,831 | $248,456 |
| 4 | $248,456 | $75,000 | $16,423 | $339,879 |
| 5 | $339,879 | $75,000 | $20,744 | $435,623 |
≈ $435K retained equity
| Year | Ending Balance |
|---|---|
| 6 | $532,404 |
| 7 | $646,024 |
| 8 | $778,825 |
| 9 | $933,766 |
| 10 | $1,114,454+ |
≈ $1.15M+ over 10 years
| Horizon | Guaranteed-Cost Insurance | SRC Captive |
|---|---|---|
| 5 Years | $0 retained | ~$435K retained equity |
| 10 Years | $0 retained | ~$1.15M+ retained equity |
Even at a 45% loss ratio, SRC continues to generate retained value over time. Guaranteed-cost insurance still produces zero retained equity, regardless of loss experience.\
*Illustrative examples only. Actual results depend on loss performance, risk management, and program terms.
Illustrative only. Not an offer of insurance or a guarantee of results.
Assumptions
$—
$—
$—
Don’t let unexpected events derail your operation. Secure the property insurance you need to protect your investments and grow with confidence.
Coverage structured for compliant, best-in-class operators across cultivation, manufacturing, laboratory, and retail operations.
Key questions operators typically review when evaluating a transition from guaranteed-cost insurance to a captive structure.
Select Risk Captive (SRC) is a member-owned captive insurance program created exclusively for established cannabis operators. It is designed to replace traditional guaranteed-cost insurance with a structure that delivers broader coverage, transparent claims handling, and long-term capital retention—while remaining fully compliant with regulatory requirements.
Traditional insurance treats premiums as a fixed expense and transfers underwriting profits to the carrier. SRC restructures insurance into a regulated risk-financing strategy, allowing qualified members to retain underwriting results, invest excess capital, and build enterprise value over time.
SRC is structured around the real operational risks of cannabis businesses, including property-related exposures. Coverage terms are customized within the captive framework and are not constrained by the exclusions and limitations common in standard carrier policies.
Yes. SRC operates within established captive insurance frameworks and is structured to meet all applicable regulatory, governance, and reporting standards. Participation is subject to underwriting approval and program guidelines.
Claims are administered within a member-aligned structure, ensuring transparency and accountability. Unlike traditional carriers, SRC’s claims approach prioritizes long-term financial outcomes and disciplined risk management—not short-term profit extraction.
Claims are funded from the captive’s pooled capital, which is built from member premiums. This alignment incentivizes proactive risk mitigation and operational discipline across the membership.
No. SRC maintains formal claims administration protocols and professional oversight. The difference is governance—not reduced protections—giving members clarity and control over how claims affect long-term capital.
When losses are managed effectively, excess premium is retained within the captive, invested while claims mature, and ultimately returned to members—subject to development periods and program terms. In guaranteed-cost insurance, this value is permanently lost to the carrier.
Over multi-year participation, retained underwriting profits can compound into meaningful captive equity. This creates a balance-sheet asset tied directly to your organization’s risk performance rather than an ongoing sunk cost.
No. All projections are illustrative only and do not represent a guarantee of performance or insurance coverage. Actual results depend on loss experience, participation duration, and adherence to program requirements.
SRC is available only to financially stable, operationally mature cannabis operators with demonstrated risk controls. The program is not available to startups, distressed businesses, or operators with unmanaged loss exposure.
Captive performance depends on disciplined participation. Selectivity protects existing members, ensures regulatory integrity, and preserves long-term capital outcomes across the program.
The first step is a confidential SRC review, where your operational profile, risk history, and financial structure are evaluated. This assessment determines eligibility and outlines potential outcomes—without obligation.
Qualified operators receive a customized captive analysis, allowing leadership to evaluate SRC as a strategic alternative to traditional insurance before making any commitment.
A confidential, no-obligation review designed for qualified cannabis operators evaluating long-term risk and capital strategy.
Strategic commentary for operators and financial leaders thinking beyond annual renewals.
Captives Driving Security and Stability for Cannabis Operators: How Risk Management Solutions Are Strengthening the Industry The cannabis industry continues to expand rapidly across the...
Exploring the Types of Captive Insurance and How Cannabis Companies Can Leverage Them for Risk Management Cannabis companies operate in a uniquely challenging insurance environment....
How the Cannabis Risk Management Framework Protects Your Business: A Comprehensive Guide for Operators The cannabis industry is expanding rapidly, presenting tremendous opportunities for operators...
