## Facts

- Green Earth operated a Colorado-licensed medical-marijuana dispensary and adjacent cultivation facility in Colorado Springs.
- Atain issued Green Earth a commercial property and general liability policy effective June 29, 2012, with knowledge that the insured business involved marijuana.
- Green Earth submitted two property claims:
  - Smoke and ash damage to marijuana plants allegedly caused by the June 2012 Waldo Canyon wildfire; and
  - Theft of harvested marijuana inventory during a 2013 break-in.
- The wildfire began June 23, 2012, before the policy inception date; the fire did not burn Green Earth’s premises, but Green Earth alleged smoke and ash entered through ventilation and damaged plants beginning around July 1, 2012.
- Atain’s investigation concluded smoke and ash would have entered as early as June 23–24, 2012, and denied the wildfire claim as occurring outside the policy period.
- Atain denied the theft claim on the theory that marijuana was excluded as “contraband” and/or not “Business Personal Property.”
- Atain also asserted that coverage for marijuana-related losses was unenforceable or void because marijuana remained illegal under the federal Controlled Substances Act (CSA).
- Green Earth sued for breach of contract and related claims; the parties filed cross-motions for summary judgment and related motions seeking legal determinations.

## Issues

1. Whether the policy’s “Business Personal Property” coverage includes marijuana plants and harvested marijuana inventory, or whether an undefined “contraband” exclusion bars coverage.
2. Whether the wildfire-related smoke and ash loss is excluded because the relevant damage occurred before the policy’s effective date.
3. Whether federal illegality under the CSA or federal public policy renders the insurance contract unenforceable as to marijuana-related losses.

## Decision

- The court granted in part and denied in part both Atain’s motions and Green Earth’s motion for partial summary judgment.
- The court held the policy could not be categorically read to exclude marijuana plants or inventory as “contraband,” treating the marijuana property as within “Business Personal Property,” subject to other limitations and unresolved facts.
- The court rejected Atain’s argument that the CSA or federal public policy made the policy void or barred enforcement of marijuana-related coverage.
- The court found genuine disputes of material fact on the wildfire claim as to when and to what extent smoke damage occurred; any portion proven to have occurred before policy inception would not be covered.
- The court recognized coverage for the stolen harvested inventory under the policy terms but left for trial disputes over quantity, valuation, and the amount of covered loss.

## Legal Principles

- Under Colorado insurance law, ambiguous policy terms—especially undefined exclusions—are construed against the insurer and in favor of coverage.
- An insurer that knowingly underwrites a risk cannot rely on vague, undefined exclusionary language to nullify coverage for the central subject of the bargain.
- Federal illegality does not automatically void an insurance contract covering state-licensed marijuana property where enforcing the policy requires only payment of money damages and does not compel illegal possession or distribution.
- Summary judgment is inappropriate when timing, causation, quantity, or valuation of claimed loss turns on disputed facts.

## Conclusion

The court enforced the insurance policy’s property coverage for a state-licensed marijuana business, refused to void coverage based on the CSA or an undefined “contraband” exclusion, and sent the remaining fact questions—timing and extent of smoke damage and the quantity and value of stolen inventory—to trial.


Green Earth Wellness Ctr., LLC v. Atain Specialty Ins. Co., 163 F. Supp. 3d 821 (D. Colo. 2016)