The coronavirus (COVID-19) pandemic is forcing businesses in the cannabis industry, like many other industries, to examine and adapt their business models to – dare we say it – the new norm. While many cannabis businesses have thrived despite the numerous risks inherent in the industry, including a lack of traditional capital sources, uneven regulation and intense scrutiny, this crisis is bringing heightened risks from burglary and theft to data breaches to a number of other ways criminals are seeking to capitalize on the crisis for their own financial gains. To this point, risk management and the need for effective insurance coverage has been on the back burner for many business owners. However, emergency preparedness needs to be top-of-mind with every business owner and operator.
Below are three types of insurances that should be part of your policy to protect you from crippling losses. We encourage you to contact S2S Insurance Specialists with any questions.
Criminals are well aware that the cannabis industry includes many lucrative, cash-intensive businesses, which means you have a target on your back. In fact, the most common cause of loss facing cannabis businesses is theft. Approximately 90% of insurance claims in the US cannabis industry so far have involved an element of theft, according to Insurance Business Magazine (Dec, 2019). This new reality was recently punctuated in a recent article in the Denver Post, titled “Denver dispensary burglaries hit 3 year high as 2019 ended with a rash of armed robberies.”
Losses from an office burglary to destruction of property to theft of finished product can have a devastating effect on your business. The only way to ensure you get reimbursed from losses caused by certain illegal activities is to have Crime Insurance. Below are some of the common scenarios that Crime Insurance covers:
- Employee theft of money, securities or property inside the premises.
- Non-Employee theft both inside and outside the premises.
- Forgery or Alteration, including inadvertently accepting forged checks or counterfeit money or employees altering checks, bank drafts and other financial documents.
- Computer and wire transfer fraud.
- Robbery of valuables while in transit under the care of a messenger or armored car.
Many business owners are not aware that Cannabis Crime Insurance isn’t automatically bundled into a Cannabis Insurance Policy, and thus, when they experience a loss due to criminal activity, they are not covered. It is important to reach out to your Cannabis Insurance Specialist to discuss your needs and options.
Cargo coverage is a protective cannabis insurance, and it can help you recover the loss in such an event that your product is lost, damaged, or stolen while being either loaded, transported, or unloaded. Many business owners and distributors do not have cargo coverage because they thought their property coverage covers cargo. Having this type of insurance policy is a necessity for cannabis business owners that rely on any form of shipping.
The black market is booming for cannabis related products and thieves are hard at working plotting out ways to intercept cargo before a shipment reaches it’s destination. Everything from growing supplies, to electronics, to raw and finished products are in high demand. Marijuana-related products can quickly become untraceable, and then repackaged and sold in a short amount of time making this type of cargo a likely target for thieves and organized crime groups that use bribes and other tactics to infiltrate supply chains.
In some states, retail stores are closed and companies are relying more heavily on delivery service. If your operation transports items via in-house or hired delivery, you need cargo coverage to protect your inventory and cash from loss.
Commercial Auto Insurance does cover the contents within the vehicle, rather it covers the vehicles from damage and the drivers and third parties from physical injury. A combination of Hired Non-Owned Auto, Crime and Cargo policies should be reviewed if your company has this exposure.
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.
In summary, the COVID-19 public health crisis has spurred all sorts of unexpected events and changes in the way business is conducted and how you are protected. Businesses are facing more serious threats as you try to adapt to the rapidly changing realities perpetuated by the pandemic.
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 S2S Insurance Specialists so we may examine your current policies, help you understand what is and is not covered, and adjust your policy, as needed.