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The Top Three Threats Facing Cannabis Businesses. Are You Prepared & Protected?

Cannabis remains one of the fastest growing industries with no signs of slowing down. As new companies emerge and established companies fight to grow their market share, the number of serious – and very real threats – business owners face are taking center stage. This is the year that business owners and operators need to double down and institute a legitimate risk management plan that includes certain, must-have insurance coverages to protect themselves.

As an insurance broker who specializes in the cannabis industry and works with a wide variety of cannabis, hemp and CBD businesses in every state where marijuana is legal, our recent analysis has unveiled the top three threats your business need to prepare for in upcoming year.


Theft will continue to dominate cannabis insurance claims this year and the reasons are two-fold: First, civil unrest and looting across the U.S. is causing heightened security risks, particularly for retail operations. Criminals are well aware that these types of businesses maintain a large supply of cash and product. As looting occurs, many owners have no way to relocate their goods away from their storefronts, which makes them a prime target for theft. However, it’s not just retail establishments that need to be concerned. Cultivators face a growing risk. State regulations require plant and production facility blueprints to be made publicly available and thieves can easily access your entire layout to devise their plan.

The second reason you need to protect your business from the growing risk of crime is, unfortunately, your employees. The harsh reality is approximately 90% of theft claims point to an inside job. Employees have a lot of opportunity to learn the vulnerabilities of your business. In some cases, employees in cannabis grow facilities and retail storefronts have developed elaborate schemes to successfully rob their employers blind.

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 theft on your premises is to have Crime Insurance. 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. Making sure your insurance policy includes Crime Insurance should be a top priority this year.


Even though marijuana is now legal in many states, the black market is still booming and cargo theft is one of the main ways criminals infiltrate the supply chain. Everything from growing supplies, to technology, to raw and finished products are in high demand. It is common knowledge in the dark underworld that cannabis related products are often untraceable and can be easily intercepted during shipping, repackaged and then sold in a short turnaround time. Having a cargo insurance policy is a necessity for cannabis business owners that rely on any form of shipping.

Many business owners and distributors do not have this type of coverage because they wrongfully assume it's covered under their property insurance policy. At S2S Insurance Specialists, we do not want you to make that mistake. This year, you should make it a priority to protect your goods in the event that your product is lost, damaged, or stolen while being either loaded, transported, or unloaded. Cargo theft isn’t going away anytime soon — not as long as the possible payday for thieves keeps going up.

Cyber Fraud & Data Breaches

Cyber risk is perhaps the greatest risk facing cannabis companies in 2021. With so much cash pouring into the space, cybercriminals are not likely to halt their attacks on the industry anytime soon. What makes you especially attractive to hackers? If you are a dispensary, it’s the vast amount of personally identifiable and protected health information you’re required to collect. If you are in the cultivation game, you must keep detailed records of your inventory and your crop trade secrets can be of high value. Even testing labs accumulate large amounts of sensitive product data through seed-to-sale platforms. Given these factors, coupled with the fact that cannabis is still a relatively young industry experiencing lightning-speed growth, cannabis businesses are prime targets for cybercrime. Even the smallest of companies are at risk for the mere fact that they are part of a larger interconnected network of software vendors. One thing is for certain in 2021: data is becoming increasingly valuable and cyberattacks are becoming more sophisticated.

Cybercrimes can have detrimental effects on your business in numerous ways. In the case of a data breach resulting in the disclosure of a third party’s private information, the third party could sue your business. The SEC could also find your company negligent in cyber fraud cases and impose significant fines. Without Cyber Defense & Data Breach Insurance, your business could be solely responsible for expensive legal bills, significant revenue losses and hefty fines and penalties from regulators. Cyber Defense & Data Breach Insurance is a must-have coverage in 2022, and beyond, in order to protect your business from crippling losses.


When it comes to mitigating risk in this business, the stakes are sky high. Cannabis companies that have not incorporated risk management into their business/operational plans will need to do so, especially those who are trying to secure funding from private equity firms. It all boils down to the THREE P’s: being “Proactive, Prepared and Protected.”

As S2S Specialists, we are here to guide you through the intricacies of insuring your cannabis business. Our job is to analyze your operations, expose and explain your potential risks – real risks you may never have even thought about – and develop a customized, cost-effective plan that offers you full protection and peace of mind.

Click here schedule a free 15-minute consultation with us so we may examine your current insurance policies, help you understand what is and what is not covered, and adjust your policy, as needed.


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