Congratulations! The cannabis industry is booming, and you're at the forefront of this rapidly growing industry. Whether you own a dispensary, grow cannabis, manufacture cannabis products, or transport cannabis, you must protect your business with the right insurance coverage.
What Are the Risks of the Cannabis Industry?
The cannabis community faces a unique set of risks. Federal illegality creates many challenges, including product liability concerns, banking difficulties, and crime, often resulting from a lack of banking options. These difficulties lead to higher insurance rates for cannabis businesses.
Why Do You Need Cannabis Insurance?
Cannabis insurance protects your business from risks specific to the cannabis industry. It can cover your business in case of product liability, property damage, loss of income, and other circumstances that could put your business at risk. The legal community is new and presents a higher risk than other, more established industries.
What Type of Coverage Do You Need?
The cannabis industry is constantly evolving, and insurance companies are working hard to keep up. As the industry grows, more types of coverage will become available. Currently, there are a few key types of cannabis insurance that every cannabis business owner should consider:
Product Liability Insurance:
This type of coverage protects your business if a cannabis product you manufacture, distribute, or sell causes harm to a consumer. The industry is new for everyone, from business owners like yourself to customers.
Even if you have complete faith in your products, follow all state guidelines, and undergo extensive third-party testing for each batch, it's still essential to have product liability insurance. If someone harms someone else, damages property, or gets sick after consuming one of your cannabis products, they could sue you.
The (although unfounded) stigma and federal status of the popular and potent plant presents unique challenges to cannabis product liability lawsuits, so it's crucial to have the right coverage in place. This policy protects you and your business in case of a lawsuit against your brand.
Property Insurance:
This type of coverage protects your business property from damage or loss. Your property is at risk, whether it's a grow facility, manufacturing location, dispensary, or office that handles cannabis business operations.
Also, your cannabis business is likely in a state where cannabis is legal, but that doesn't mean your property is safe from break-ins, theft, or damage. Cannabis businesses are actually at a higher risk. This coverage can help you replace or repair your property if a covered event damages it.
If you own the building your business is in, you'll need to insure the structure and your cannabis-related equipment and inventory. Your landlord's insurance policy will probably cover the building if you're renting. However, you'll still need to insure your equipment, merchandise, and any cannabis-related improvements you've made to the space.
Business Interruption Insurance:
This coverage can help your business recover from lost income because of a covered event, like a fire or bad weather. This policy can help keep your cannabis business running, even if an unforeseen event damages your property or prevents you from operating.
Cannabis Delivery and Transport Insurance:
This coverage protects you if you're in the cannabis business and make deliveries or transport cannabis products. This insurance is vital because many cannabis businesses are at a higher risk of theft.
Cannabis growers, manufacturers, and retailers often need to transport cannabis products to other businesses or customers. This type of policy can help you replace cannabis products that are lost or stolen while in transit.
Other Types of Coverage to Consider
In addition to the cannabis insurance coverage types mentioned above, you may also want to consider other types of coverage, like:
- Crime Insurance: This type of policy can help you recover from losses due to employee theft, forgery, and other crimes. Unfortunately, the industry is still new, which makes cannabis businesses a target for criminals because of the banking issues. Not only do businesses have expensive products, but they're also flush with cash.
- Workers' Compensation Insurance: If you have employees, this type of coverage is usually required by law. It can help your employees if they're injured on the job.
- Directors and Officers Insurance: If you have a board of directors or executive officers, this type of policy can help protect them from personal financial losses if they're sued because of their work for your cannabis business.
No matter what type of cannabis business you have, it's essential to have the right insurance coverage in place for protection. The cannabis industry is growing and changing daily, so working with an experienced cannabis insurance agent is important to ensure you have the coverage you need.
Crop Insurance:
If you're a cannabis grower, you need crop insurance to protect your investment. This type of policy can help you recover from a loss due to bad weather, pests, or other events that damage your cannabis crop.
Why is Cannabis Insurance a High-Risk Coverage?
The cannabis industry is federally illegal, which creates many challenges, including product liability concerns, banking difficulties, and crime. These difficulties lead to higher insurance rates for cannabis businesses. These issues make it difficult for insurers to assess perils and offer protection. The industry is also new, so there is little data to help determine risk.
How Can You Get Cannabis Insurance?
Cannabis insurance is available through specialty cannabis insurers or standard commercial insurers with cannabis divisions or products. The cannabis industry is constantly evolving, and insurance companies are working hard to keep up. Highline Risk Solutions is a commercial cannabis insurance broker that can help you find the right cannabis insurance policies for your business.
We understand the challenges and complexities of the cannabis industry, and we're here to help you protect your business. Contact us today to learn more about our cannabis insurance solutions.
