The cannabis industry is exploding in popularity. Similar to other enterprises, companies doing business in the cannabis space need insurance. However, the specific cannabis business insurance that is optimal for one company might not be ideal for the next. Let’s take a quick look at the importance of cannabis business insurance and delve into the different types of insurance that are optimal for players in this rapidly growing sector.
The primary reason to obtain cannabis business insurance is to offset risk. An injured employee or customer has the potential to file a personal injury lawsuit against the business unless the proper insurance coverage is in place. Thankfully, cannabis insurance programs are now available for industry businesses of all types, regardless of their years in operation, size and specific niche within the overarching cannabis industry.
The cannabis business insurance necessary for a specific company hinges on the specific products and services the business provides. Cannabis dispensaries should have extensive coverage that helps to offset the risks of conducting business. Cannabis dispensaries need:
Property insurance safeguards the commercial property of the business, ensuring financial compensation is provided if that property is tarnished, destroyed or compromised in another manner. Even inventory is covered through such a policy in the event that it is damaged or ruined as a result of a natural disaster, theft, fire, etc.
Every cannabis dispensary should have product liability coverage applicable to its unique value offerings. Most cannabis dispensaries tie their product liability coverage to their commercial general liability policy to ensure they are not legally liable in the event that a customer suffers a harmful side effect from consuming cannabis products. Additional examples of insurance coverage necessary for cannabis dispensaries include
Those who grow cannabis or manufacture cannabis packaging or related products also need insurance. These companies are required to adhere to the nuanced requirements of industry regulations pertaining to licenses as there are risks inherent to conducting business in this space. A single mistake when manufacturing cannabis/hemp products or growing the plants can alter their value, quality and safety, setting the stage for considerable losses and possibly even a personal injury lawsuit.
Furthermore, cannabis manufacturers should also safeguard their site and equipment where cannabis is grown through an expansive commercial property policy, ensuring a financial windfall is provided in the event that the manufacturing plant or grow site is compromised.
The equipment used by cannabis manufacturers ultimately shapes the language of the overarching commercial property policy. High value pieces can be listed on the equipment policy in an itemized manner. Furthermore, language pertaining to the equipment breakdown can also be added to bolster the policy’s value all the more.
Product liability policies can even provide protection in the event that a customer who consumes cannabis becomes ill. In fact, plenty of dispensaries mandate that manufacturers have such an insurance policy in place prior to the point at which they do business with one another. It is also worth noting cannabis manufacturers should also have a workers’ compensation policy in place to provide injured employees with coverage for injuries and illness resulting from work-related activities.
Businesses that cultivate cannabis are subjected to considerable risk ranging from theft to equipment malfunctioning, vandalism and fire. After all, a considerable sum of money is invested in the underlying infrastructure necessary to cultivate cannabis plants. Financial vulnerabilities will arise if lighting, equipment, seeds, and plants are compromised. Cultivators who perform the research necessary to find the optimal insurance coverage will protect this investment.
As an example, every cultivator of cannabis should look into property and crop insurance. Crop insurance is that much more easily accessible when grows are conducted in controlled spaces such as warehouses and greenhouses. Cargo and inland marine policies are also solid additions to safeguard inventory in transit when companies interact with dispensaries and other parties. Business income, workers’ compensation and commercial auto coverage are also essential forms of insurance for cannabis cultivators.
It is now legal to deliver medical cannabis and even recreational cannabis in certain jurisdictions. Such delivery companies should have a cargo insurance policy in place to insure products in transit to the sites of delivery. A hired owned and non-owned insurance policy will also prove essential to reducing risk during deliveries as employee auto insurance policies are not applicable. If a fleet of cars is used for deliveries, commercial auto insurance will be necessary. Workers’ compensation, business income and general liability coverage are also necessary.
Businesses that sell the equipment necessary to grow cannabis and hemp also need their own insurance coverage. Several such coverages are available to mitigate the financial fallout from damages and claims. Commercial property coverage safeguards the shop against perils ranging from vandalism to theft, fire and more. Hydroponic shops should also have product liability insurance in place to guard against claims that have the potential to arise after equipment sold to customers no longer works as designed. The insurance policy will kick in and mitigate or fully offset resulting customer losses.
Just starting your Cannabis Business? Check out these Steps to a Startup.
Posted by Canna Business TeamFacebook
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