Cannabis Testing Labs needs a variety of different marijuana insurance policies, depending on state laws. Marijuana testing labs can get a cannabis business insurance for protecting Directors and Officers against negative actions levied against your business by investors, shareholders or damaged parties. This type of policy can include cannabis lawsuits, third party defense and many other types of risks associated with running a cannabis testing lab facility. A cannabis lab testing insurance policy pays for legal defense, compensatory damages and fees. When outside cannabis investors are looking for new marijuana lab testing companies companies to fund, they are more attracted to company’s who carry D&O policies that protect the cannabis company’s and their interests.
In January, 50 pounds of medical marijuana produced by mostly Michigan caregivers was recalled after it was discovered that it was contaminated with E. coli, arsenic, salmonella and cadmium. Marijuana lab test facilities are mandated in almost all states that have legalized medical cannabis with the exception of states like Oregon.
Heavy metals, microbials and other toxins are commonly found in marijuana, making cannabis lab testing facilities a necessity. In states like Michigan, cannabis testing facility insurance is advisable since the science behind testing for toxins and potency require sophisticated equipment like spectrometers.
The Medical Marijuana Licensing Board is allowing licensed facilities to continue purchasing caregiver-produced product through March 31 to close a supply gap. Registered caregivers have been supplying a limited number of patients for about a decade.
Patients must sign a release if they purchase caregiver-produced marijuana, said David Harns, a spokesman for the state Department of Licensing and Regulatory Affairs.
“The products will not be required to have met state testing standards, so patients need to understand that fact and assume the potential risk that the products may present,” he said.
Patients can have the products examined at a safety compliance facility, Harns said.
The Michigan Coalition of Independent Cannabis Testing Laboratories, which is made up of licensed testers, growers and processors, said the selective enforcement of safety regulations doesn’t ensure patients have access to safe medical marijuana.
“Under this new ruling, Michigan’s most vulnerable patients are buying purported medical cannabis products that could legitimately harm them,” the group said in a statement.
Marijuana product liability insurance and cannabis lab testing facility insurance is very important in order for companies to have the coverage to survive setbacks. The cannabis industry is still in its infancy and while the industry waits for federal marijuana reform, cannabis companies need all the back up they can get. Reach out to David Rahn or Eric Rahn with S2S Insurance Specialists to find out about all of your marijuana insurance needs.
Opinions on the emerging cannabis industry are so numerous that they are beyond my ability to track them. Everyone is either claiming to be an authority on the business of legal marijuana, or are striving to become the authority. The truth is that nobody is a complete authority on legal cannabis. It is still too new of an industry, and the proof is how inconsistent the rules and regulations pertaining to marijuana/hemp/CBD vary from state-to-state, and within each state! One moment Michigan has a restricted medical marijuana program, the next moment they have legalized adult-use marijuana. How can anyone be an authority, when fragmented state and federal regulations continue to evolve?
You should all know by now the largest barrier to entry into this industry is the Schedule 1 status of cannabis. This particular legal barrier unavoidably looms in our background everyday. Attending B2B cannabis conferences, from smaller more intimate ones such as C-LAB events to massive conferences like MJBiz, I consistently listen to speakers, vendors and attendees bring up the same topics. All of these cannabis conferences serve to educate and communicate, but no matter where I go people still talk about banking restrictions, merchant service problems, taxes being too steep to turn a profit due to IRS Tax Code 280E, inability to engage in interstate commerce and all sorts of marketing challenges. For us of course, it is the barriers to suitable marijuana insurance policies that we focus on the most.
How long does it take for a state regulated body to be funded, staffed, implemented, grow and stabilize? Depending how fast current laws are adopted or changed, it will take a long time and a lot of discussions as to how the cannabis Industry, the federal government and the cannabis approved states will come together to implement best in classlicensing and regulations, product quality standards, taxation and enforcement. Through this evolution of an industry, we will witness successes and failures along the way.
Look at Massachusetts, voters legalized adult-use marijuana in 2016, and it took over two years for sales to begin with only two dispensaries allowed to open by December of 2018. Florida has multiple lawsuits filed over unconstitutional medical marijuana laws that do not match what voters approved in 2016. State laws are changing on a regular basis and have not even stabilized in states like Colorado and Washington which began selling adult-use cannabis in 2014 and medical marijuana well before that.
The evolving marijuana industry is full of so many financial and regulatory uncertainties that insurance policies for cannabis companies are not consistent from one carrier to another. Marijuana insurance companies like S2S Insurance Specialists have to stay current with many state and federal regulations. Federal prohibition continues to plague the cannabis insurance industry by preventing it from operating in a free market environment. These restrictions have made most big insurance companies reluctant to enter the cannabis market place, therefore we are restricted to a couple of surplus lines carriers.
Best practices in business are still evolving in the cannabis space. The time for cannabis entrepreneurs to build, scale and stabilize their businesses is now! We have all read and heard about the growth projections of the cannabis industry. Projections that cannabis will represent the next $20 billion industry are probably conservative. We will eventually rival the multi-billion dollar snack, alcohol and pharmaceutical industries. As companies scale up, management teams become the forefront of any successful operation.
Most professionals I have met have pivoted into the cannabis Industry from other specialized professions. Like myself, they see an opportunity to do something new and exciting. We need to bring the best of our skill sets to this very young and emerging industry. Come into this industry with your eyes wide open. The opportunities in cannabis are great, but the competition is fierce. It takes more than just a love of marijuana or the passion of wanting to see the social injustice of marijuana prohibition come to an end. It takes a strong understanding of the fundamentals of business. It takes organization and constant research to understand the next big trend or new state mandated rules.
As cannabis insurance specialists, David and I stay current on industry trends, data points, cannabis research and the full spectrum of the supply/distribution chain. The biggest problem we all face in this young emerging industry is the lack of credible and actionable data. Like most institutional markets, insurance relies heavily on the data acquired across the industry in order to rate, compare and assess risk. We also follow current industry news and insurance trends in cannabis.
The most recent industry change was the passing of the2018 Farm Bill. It allows for broad cultivation of hemp, not simply pilot programs for studying market interest in hemp-derived products. Its language clearly allows for the transfer of hemp-derived products across state lines for commercial use and other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in a manner consistent with the law.* Now that hemp will be descheduled, along with hemp derived CBD, hopefully insurance for these products will be more widely available and competitive. There is hope that states will offer state sponsored crop insurance for hemp growers.
Another big trend we are seeing is the need for companies to raise capital for future growth. Many cannabis companies are looking towards the Canadian stock exchanges such as the TSX, VSE and CSE to raise funding. When companies engage in selling shares of stock to the public, there is a greater need for Directors and Officers Liability insurance (D&O). A Directors and Officers Insurance policy protects you as a director or officer of the company if your actions negatively affect the company’s profitability or if the company is sued because of your actions. The policy will pay for legal damages and fees. D&O helps preserve the company’s cash flow against expensive legal bills. These sorts of risks will become even more apparent as the number of cannabis stocks continue to grow and the amount of active investors and traders diligently following these companies hope to capitalize on the market by challenging management and business development goals.
We continue to follow various insurance claims affecting the cannabis Industry. We are seeing claims in the product sector, D&O claims from shareholders, employment dismissal issues and crop/property claims due to the fires on the west coast. California’s gray market persisted for 20 years, but over the summer it became mandatory that any cannabis product intended for commercial sale undergo product safety testing by state certified labs. A Sacramento testing facility that had serviced the industry for years was just suspended for failing to test for 22 pesticides. The cannabis was distributed to California consumers and the recall will cost many companies in legal fees, fines and potentially their licenses while the state courts figure out who is at fault for the lost revenues. Stories like this will hopefully start to weed out the bad actors in the industry.
We highly recommend that management review their insurance policies, policy limits and deductibles every six month to make sure that as your business grows, you are maintaining adequate coverages. Many things change in the course of a year, it is important to constantly manage your risk assessments. S2S Insurance Specialists are dedicated to helping you insure, from seed to sale, all your cannabis, CBD and hemp insurance needs.
Reach out Eric Rahn and David Rahn to find the cannabis insurance policies that are most suitable for your company.
https://www.s2sinsure.com/wp-content/uploads/2018/12/hemp-field-3661214_960_720.jpg720960Eric Rahnhttps://www.s2sinsure.com/wp-content/uploads/2019/04/logo.svgEric Rahn2018-12-18 13:53:072018-12-18 14:08:39The Evolution of the Emerging Cannabis Industry
As cannabis and CBD oil become more mainstream due to legalization in states across the country, it is important that consumers know what they are consuming. Cannabis lab testing allows for wholesalers, retailers, and the end consumer to trust that what they are selling/buying is what they believe it to be. The cannabis and CBD market is new and growing with increased competition everyday, so it is important that the consumer knows how to distinguish the good from the bad. If you are a person looking for just CBD oil, which lacks the THC or the psycho-active component of cannabis, you do not want to end up with something that has more THC than anticipated. Same goes for someone looking for a product containing THC, you do not want something missing the main ingredient. Cannabis lab testing helps to prevent those types of mistakes from happening, among others.
When searching for a CBD or cannabis product, consumers should look for products that have been tested by a third party and not just the company selling it to the consumer. Independent testing companies stake their reputations on each test they produce, so they have no reason to be biased toward manufactures. The job of the third party cannabis lab testing facility is to identify the purity, potency, and other data points to ensure the product is safe for consumption. Most states have requirements for lab testing of all cannabis and CBD products, but these regulations and requirements vary state to state.
Cannabinoid potency data quantifies levels of plant cannabinoids present in cannabis products. Producers are required to obtain potency data for THC and CBD, the two most common cannabinoids. It’s important for consumers to know THC and CBD levels because these will have a strong influence on the effects of the product. For example, some medical patients may want a strain with a high CBD: THC ratio, while adult-use consumers may request the opposite.
According to Confidence Analytics, a state-certified laboratory in Washington, “there are no strong regulations in place about how cannabis chemicals are measured. However, HPLC has emerged as the dominant technique for measuring cannabinoids.” In other industries, there are specific guidelines on testing methods and settings for laboratory equipment.
This lack of regulation can lead to discrepancies in potency data and inaccurate cannabinoid data. States are pushing to standardize cannabis testing and ensure that potency values are consistent across laboratories. In Washington state, a group of I-502 accredited laboratories are undergoing a “round robin,” measuring the potency of an unknown cannabis sample and comparing the results between laboratories. If proper testing practices are in place at each laboratory, reported potency data should be similar across the board.
If you are the owner or manager of a cannabis testing lab, you are aware of the importance of what happens in your lab. The flip side of this from cannabis insurance specialist Eric Rahn is “are you prepared to deal with the cost of a mistake”? He follows that statement with “Cannabis is an industry that requires accurate compliance and financial records, cannabis insurance can safeguard you from faulty errors and omissions.” Cannabis labs are no different than any other branch of the cannabis business and need specialized insurance that covers the lab in spite of it’s dealing with cannabis. Cannabis is a Schedule I drug in the US and often can prevent insured business owners from collecting if they don’t have the right policy. Contact an insurance professional at S2S Insurance today.
At S2S Insurance we cover more than just marijuana dispensaries, and cannabis grow operations. S2S Insurance covers a multitude of facets in the cannabis industry, including cannabis testing labs. As cannabis use moves from the illicit market into the mainstream retail market, state legislatures are requiring higher standards for the cannabis that makes it to market. Each state varies on what the regulations and requirements are for testing and results, which is why it is important cannabis businesses owners review the regulations with an attorney.
S2S Insurance insures cannabis testing labs
The legal cannabis market is big business and cannabis business owners can potentially see big profits once their products clear the legal hurdles. While there is a great deal of pressure on the cannabis business owners such as the dispensaries and the growers, there is also a great deal of pressure on the testing labs. The cannabis testing labs in each state or pressed with having professional, reliable, consistent staff responsible for testing the various cannabis products for market. While cannabis labs are staffed with trusted professionals there is potential for a mistake. California for instance has strict testing requirements that take time to complete. If the labs make a mistake, file an issue on an incorrect report, or omit some form of critical information, the results could be devastating to the industry in that state. A mistake in the lab could cause production delays, could result in a recall, and possibly even a class action lawsuit. If a testing lab is the cause of any of this due to an error or omission, that lab may be liable for fines and damages.
One in five batches of marijuana has failed laboratory testing since new state safety requirements kicked in July 1, according to data from the California Bureau of Cannabis Control. Failures have been triggered by inaccurate labeling or contamination from pesticides, bacteria or processing chemicals.
Those testing requirements and results have left some retailers with severely limited inventory over the past few weeks, as cultivators and product manufacturers scramble to get compliant products to market.
The new testing requirements have also created backlogs at busy labs. The state has licensed just 31 testing labs, most located in Northern California, and many of them aren’t yet taking customers. As a result, Rinella said cannabis safety tests are taking between one and two weeks.
As previously stated, S2S Insurance can handle all of your cannabis business insurance needs whether you are a dispensary or a cannabis testing lab. If you own a cannabis testing lab it is crucial to insure against liability and professional liability. Put another way you should look for coverage against liablity incurred as a result of errors and omissions in performing professional services. The members of your staff are trained professionals and in some instances may be licensed, which means they are held to a higher standard. Due to the higher standards attributed to your staff if they were to commit an error, there may be potential for a professional liability claim. As always review your policy with one of the experienced agents at S2S Insurance and with an attorney as coverage limits do apply.
As more states legalize marijuana for medicinal and recreational purposes, safety of the product will become more of a concern. States like Michigan are tackling the issue of safety head on by requiring cannabis products be tested by a licensed cannabis testing facility before hitting the open market. The use of a licensed cannabis testing facility is a move to protect consumers from potentially harmful products that could have impurities or concentration levels that are too high, or even too low. This requirement of using a cannabis testing facility creates a level of accountability for cannabis businesses in the medical marijuana industry in the state of Michigan.
The state of Michigan is facing a dilemma with their medical marijuana requirements because the cannabis testing facilities available to test cannabis products have not obtained licenses. With no licensed cannabis testing facilities available in the state, other businesses that will transport and provide cannabis to patients are unable to legally operate. Michigan’s system for legalized medical marijuana relies on the ability to have all products tested at a licensed cannabis testing facility, and if products have not been tested, they cannot be distributed.
However, a key step in the state’s new system — a safety compliance facility where medicinal marijuana would be tested — has not yet been licensed in Michigan.
“Since none of those have been licensed yet, there can’t be a complete system yet,” Harns said.
That means none of the newly licensed operators can legally provide medicine to patients under the new system.
Operators approved for new licenses can wait to pay the $48,000 fee that would make their new license active, and can continue to operate under the second set of emergency rules the state put in place in May, Harns said. However, once an operator pays the $48,000 fee to make the license active, they’ll have to comply by the new medical marijuana rules, Harns said. That means they can’t distribute product to medical patients until their products have been sent to a licensed testing lab to ensure safety of the product.
Cannabis testing facilities in the state of Michigan carry a great deal of responsibility for the entire medical marijuana industry in that particular state. As a business owner of a cannabis testing facility that is relied upon to supply a form of medicine to patients, it is critical that a risk management plan is set in place. Cannabis testing is complex and presents the possibility for errors. Errors in testing can lead to a halt in operations, recalls, and law suits. If a cannabis testing facility makes a mistake it can cost the owner of that facility large sums of money to resolve.
Business owners should look to mitigate risk by working with a knowledgeable insurance company that can help guide them through the process of choosing the best insurance policy. A good insurance policy can help protect a cannabis business owner from financial losses due to errors, mistakes and issues in compliance. Without a well thought out risk management plan marijuana business owners could be facing financial losses which include fines from the state, revenue loss due to work stoppage and possible legal fees. It is also important to remember that regardless of what type of cannabis insurance policy you have, coverage limits will apply. You must read your policy with both your agent and your attorney to determine what your coverage consists of.
As the interest in legal cannabis grows, government agencies and consumers alike will want to know what they are consuming. Cannabis testing of products is becoming a standard in all states that legalize medicinal use or recreational use marijuana. The standards for this testing vary state to state. In some states cannabis testing is carried out similarly to that of pharmaceuticals. Some states are testing for purity, contaminants, and potency, while others are testing for only 2 or 1 of those elements.
Cannabis Testing varies from state to state
The cannabis industry has looked to the federal level for guidance on cannabis testing, but have received no help from federal agencies. Cannabis carries a schedule I designation under the Controlled Substances Act, designated by the DEA thus making it an illegal drug. Because of the illegality of marijuana federal agencies refuse to issue any standards regarding cannabis testing or any other form of regulation dealing with the drug. The federal government has taken a hard stance that even with states legalizing both medical and recreations use of the plant, federally these agencies see the drugs as an illegal substance. The federal government’s stance on the issue leaves states to individual mandate testing as they see appropriate for their states and consumers.
State regulators have had no guidance from the federal agencies that usually set health and safety standards for agriculture, food and medicine because the federal government considers marijuana to be illegal. They have been hampered by the fact that there’s little research on how marijuana tainted with potential toxins affects humans, partly because the federal government funds limited marijuana research. And they’ve also had to adjust testing regulations to reflect the costs and amount of tests fledgling legal marijuana markets can handle.
In Oregon, for instance, initial rules rolled out in October 2016 for marijuana testing and laboratory accreditation contributed to backlogs at laboratories and shortages of product on dispensary shelves. Regulators, seeking to ease the pressure on the market, issued new rules that December that reduced the number of times a harvest, or a batch of chocolates or candies, would have to be tested.
Cannabis testing helps to protect the cannabis business owner
As insurance specialists, we at S2S Insurance want to provide cannabis business owners with the necessary information to make wise decisions that will impact the success of their business. We would tell all businesses owners to become aware of the requirements in their particular state regarding testing. Understanding the regulations in your state early in the business planning process can help a business owner begin to estimate costs. Laboratory testing of any kind is never inexpensive and cannabis testing is no different. Cannabis business owners should not overlook this requirement if it is a state mandate. Business owners should also be aware of the risks that are associated with cannabis testing and protect themselves. While cannabis testing is meant to protect the end consumer mistakes are made. Testing is complicated and requires the upmost attention to detail which creates room for error. The margin for error increases as the requirements become more stringent. Business owners should be protect themselves with product liability insurance that can help mitigate risk in case of issues of recalls, production stoppages, and law suits.
https://www.s2sinsure.com/wp-content/uploads/2018/07/US-NEWS-MARIJUANA-SAFETY-SH.jpg449600Eric Rahnhttps://www.s2sinsure.com/wp-content/uploads/2019/04/logo.svgEric Rahn2018-07-13 09:16:512018-11-05 09:36:22Cannabis Testing is Not An Exact Science
Cannabis testing labs are not the first thing people think of when thinking of the cannabis business. When we begin to think of why cannabis is becoming legal in many states, it begins to make sense why the cannabis should be lab tested. Cannabis has a number of medical benefits and uses. For safety reasons the traditional medicinal products we use have certain information clearly displayed on the label. Our medicine is labeled with information regarding strength, dosage, and necessary warnings about side effects. As cannabis moves from the illegal market into the mainstream, these same standards will need to apply to marijuana. In order to define the parameters of safety, dosage and best use, cannabis must undergo testing. The need for testing is where cannabis testing labs come into play.
Due to a demand and need for cannabis testing labs, owners of these labs must be aware of the risks associated with the labs. Cannabis business owners should always look to mitigate risks in all facets of business including their cannabis testing lab facilities. Failure to properly insure your lab could lead to massive financial losses that many business owners cannot recover from. Expensive testing equipment, computers, documents, samples can all be damaged in an accidental fire, burglary, or other types of unpredictable peril. Business owners can protect their investment by mitigating risk and having property insurance for their cannabis testing labs.
One scientist analyzed a number of marijuana testing labs in Washington and discovered that four labs had gone months without rejecting any of the marijuana they had tested. These perfect results are virtually impossible to achieve without turning a blind eye or tampering with the data. In other words, the labs were simply letting the marijuana slide through the regulatory process, regardless of its contents or contaminants. As a result the legal cannabis available in many states may still contain contaminants and unknown levels of cannabinoids. Smoking certain bacterias that can develop in cannabis—the types that these testing labs are supposed to root out— can be dangerous to human health.
A qualified scientific laboratory will be required to follow specific scientific guidelines for testing and verifying the levels of CBD, THC and contaminants of the cannabis. These testing procedures are expensive and require high levels of expertise, are complex, and create a greater chance for mistakes to be made. Mistakes in testing could lead to recalls, stops in production and sales, product liability law suits and punitive damages which are all costly to the business owner. Cannabis testing labs must be protected through errors and omissions insurance matched with general and excess liability to prevent suffering financial losses that can cripple a business. Even certified labs that use highly trained professionals are at risk. No matter how well trained a professional is, there is the ability to make a mistake in the very complex field of scientific testing. It is critical that cannabis business owners work with an insurance agency that specializes in cannabis insurance to put together the right insurance package for their business.
https://www.s2sinsure.com/wp-content/uploads/2018/07/cannabis-testing-lab-insurance-s2s.jpg400800Eric Rahnhttps://www.s2sinsure.com/wp-content/uploads/2019/04/logo.svgEric Rahn2018-07-10 09:51:482018-11-05 09:20:08Why Cannabis Testing Labs Need Insurance
A Division of Southeast Insurance Group
S2S Insurance Specialists LLC is an international insurance intermediary and brokerage firm, specializing in the placement of insurance and other risk insurance services to businesses operating in the Medical And Recreational Marijuana Industry.