You know you need insurance for your cannabis business, but where you do begin? What are the must-have policies? How much insurance do you need? Which types of insurances are required by law?
If you are asking these questions, you are not alone. Cannabis businesses across the marijuana, hemp and CBD supply chain, which includes growers, producers/distributors, local dispensaries and testing facilities, face unique risks that require specialized insurance policies. To complicate matters, many of the necessary coverages vary from state to state and cannot be acquired through traditional insurance carriers given marijuana’s federally illegal status. As S2S Specialists, we are here to guide you through the intricacies of insuring your cannabis business and give you peace of mind. Below are the main types of insurances that should be part of your initial policy to protect you from crippling losses. We encourage you to reach out to S2S Insurance Specialists with any questions and to develop a cost-effective policy that is tailored to your specific needs.
- Workers Compensation Insurance
It doesn’t matter if your cannabis company consists of three or 300 employees, Workers’ Compensation Insurance is a necessary policy. Every single day, your employees are exposed to numerous risks due to the nature of your operations. Even one accident can have a devastating effect on your business. If a worker slips and breaks his leg in your dispensary or a budtender cuts her finger on the job, Workers’ Compensation Insurance will pay for their medical care and lost wages, regardless of who is at fault in the accident. Above all, most states require a Workers’ Compensation policy in order to conduct business. However, the lack of consistency in state regulations is why you should consult with an insurance broker that specializes in cannabis for your risk management needs.
- Property & Casualty Insurance
Whether you own a retail store, a warehouse, a testing facility or any inventory, you need to protect your assets from potential loss or damage. Property & Casualty (P&C) insurance protects your business against common and costly perils such as a fire, lightning, explosion/implosion, and even less common – but still possible – risks like riots, strikes and terrorism. P&C insurance not only pays for damages to your business property resulting from a covered loss but it also the contents within your place of business, including office furniture, computers, inventory and other assets essential to your business operations. There are policies that will also provide the funds required to keep your business afloat until the damages from the loss are repaired. Any cannabis business with a physical property and location(s) should have a comprehensive property and casualty P&C policy in place.
- Cyber Defense & Data Breach Insurance
Cyber fraud is a very real and costly risk that is largely unaddressed within the cannabis community. Even the smallest of cannabis businesses are at risk of data breaches because they are part of a larger interconnected network of seed to sale vendors. Particularly right now in the midst of the pandemic, more employees are working from home, which greatly increases your company’s risk of network vulnerability and data breaches. Given that many dispensaries collect patient/client personal information, a breach of even a single computer could provide hackers with valuable information on all their partnering dispensaries, product deliveries and clients’ private information. The impact of a data breach reverberates and can have a costly impact on your operations. For example, if a company’s distributer, for example, detects the breach, your company can be held liable. To help mitigate risk, it is strongly recommended that you have Cyber Defense & Data Breach Insurance to protect you from costly legal claims.
- Product Liability Insurance
Product Liability Insurance is designed to protect your cannabis company from claims that can happen anywhere along the supply chain, including product contamination, mislabeled products, false advertising or defective products. With proper coverage, your insurance company will pay for damages and legal expenses if you are sued, up to your policy limits. Your Product Liability policy will also cover any medical expenses for those who are harmed by your business. Product Liability Insurance is often overlooked, especially by small to mid-size businesses. However, your cannabis business needs this type of coverage if you sell any goods or products that end up in the hands of the public. In fact, your business may be contractually obligated to have Product Liability Insurance.
How to Get Started
Acquiring insurance coverage is one of the most important purchases you will make for your Cannabis business, and shopping for this valuable protection can be a daunting process that involves researching, evaluating and comparing dozens of different coverages to ensure you and your business are adequately protected. That is why S2S Insurance Specialists provides a Cannabis Insurance Starter Guide to make your life easier. Our job is to analyze your company, expose and explain your potential risks – real risks you may never have even thought about – and develop a customized plan that offers you full protection and peace of mind.
To get started, you should schedule a free 15-minute consultation with us so we may develop a comprehensive understanding of your daily operations and the risks involved. Essential information like sales revenues, number of employees, listing of business properties, annual payroll expenses, and a business operations plan will help us navigate the marketplace and make sure that your coverage is tailored to your unique needs.
We understand that insurance may not be at the top of your mind, but nonetheless, taking steps to minimize your risk now will protect you and your company down the road. Please contact us so we may examine your current policies, help you understand what is and is not covered, and adjust your policy, as needed.