The SEC May Find Your Marijuana Company Negligent in Cyber Fraud Cases

The enthusiasm towards the marijuana industry is palpable. The cannabis space is growing at a remarkable pace and both voters and legislators are going through the slow process of adapting laws to make room for the industry in the mainstream. However, it is easy for a marijuana company to get lost in the enthusiasm and lose sight of the bigger picture. The reintroduction of cannabis into the mainstream at this time, an era where technology is advancing at a speed most people are challenged to keep up with, presents risks any cannabis entrepreneur should stay current with on a consistent basis. These are the sorts of risks that only the proper marijuana insurance policies may be able to cover. Many companies may feel they have solved their cyber security problems by having anti-virus software throughout their network of company computers. But, many cyber attacks have little to do with the vulnerabilities present in a computer, but instead with the users of the computers.

SEC cyber security report, Marijuana company, marijuana data breach insurance, s2s insurance, eric rahn, marijuana insuranceRecently, the SEC issued a warning to mainstream publicly traded companies that they will soon have little tolerance for negligence in maintaining cyber security. While the advancement of technology is swift, companies have now had decades to become accustomed to electronic financial transactions and the criminal efforts to fool companies into making deposits into fraudulent accounts. Sections 13(b)(2)(B)(i) and (iii) of the Securities Exchange Act of 1934 (“Exchange Act”) requires that companies “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization,” and that “(iii) access to assets is permitted only in accordance with management’s general or specific authorization.”

marijuana company, cannabis email fraud, marijuana cyber security insurance, eric rahn, s2s insurance, who insures marijuana companies, cannabis insurance specialistsIn the SEC report, none of the companies referenced, which lost nearly $100 million in total to cyber fraud, were found to be guilty of negligence. However, the report is a clear warning by the SEC to these companies and others, that anything but the strictest protocol for tracking transactions will be sufficient for publicly traded companies moving forward in order to protect investors. Hardly any of the funds stolen from these companies were recovered. To have a reparation filed against a company by the SEC for negligence in accounting controls on top of losing millions of dollars would scare shareholders away. The incidents referenced in the report involved the simple use of email. In some cases, an email address was created that looked like an official request for payment from an executive at a vendor. On the surface the email may have looked official, but employees working in processing plainly rushed through their tasks without reading emails thoroughly, or they would have likely identified discrepancies. The other cases involved hacking into company email accounts and manipulating financial ledgers. The criminals blended future transactions into the their look-alike vendor accounts with legitimate future transactions. The SEC’s point should be well taken. The stolen funds were ultimately due to the fact that the companies were not following their own sets of checks and balances and failed to identify the scams, when a diligent eye would have caught them.

marijuana company, s2s insurance, david rahn, cyber security insurance, cannabis insurance specialistsNow, if we take a look at the cannabis industry, the vulnerabilities to these sorts of attacks seem obvious. Cannabis companies have much more to track on their own due to the federal Schedule 1 status of marijuana. A marijuana business does not have the benefit of bank record keeping to track transactions since most banks refuse to accept the funds of a cannabis company in fear of violating anti-money laundering laws. Granted, cyber attacks like the ones identified in the SEC report rely upon electronic transactions, therefore a cash business would not be the target of this specific sort of cyber crime. However, as long as a criminal can isolate a flaw in a company’s tracking of financial transactions, they will see an opportunity to steal. Should the federal government look to legalize cannabis, and banks do start accepting the funds of the marijuana industry, then cannabis companies may be the biggest target of all. Phases of transition are where mistakes are most likely to occur, and hackers know it.

Tracking products all the way from seed to sale is not only happening in the cannabis industry. With the creation of blockchains that are commonly associated with cryptocurrency, comes a means to create verifiable ledgers for all sorts of transactions that are not centralized and therefore are not as easy to hack. So, if you want to know that you are eating a tomato grown on a certain farm in the United States, the tracking system can confirm where the tomato was grown and where the seed came from. To do this, a strict log of all transactions must be kept and quickly verified by third parties. Any discrepancy in that log throws up red flags and any fraudulent transactions can be rooted out quickly. It is this sort of organized tracking that is the way of the future and intended to eliminate these very sorts of fraudulent cyber attacks. While the advancement of technology provides new and different opportunities to steal, it also provides solutions.

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The unfortunate incidents cited by the SEC in their report shows that human involvement is still very necessary when it comes to accounting and logging transactions. It is necessary for all protocol to be be followed exactly on a consistent basis in order to prevent these sorts of breaches that can result in the loss of millions of dollars. Computers are nothing without people still, which means that human error will continue to be a factor. However, cyber security or data breach insurance for a marijuana company can counter those financial losses. It is up to the pioneers of the cannabis industry to set the standard, once marijuana goes completely mainstream, by recognizing cyber threats and continuously staying updated on new threats. Things are happening fast, and should marijuana become rescheduled or even descheduled, then a multi-billion dollar industry will suddenly be thrust upon the banking sector. Clever criminals will identify this transition phase as a time when sloppy accounting and other slip ups are likely to happen leaving cannabis companies vulnerable to cyber attacks.

Eric and David Rahn of S2S Insurance Specialists understand these cyber risks well. With over two decades of working experience in mainstream business and watching technology advance at such a rapid pace, they can help you understand the cyber security risks of your marijuana company. They can review with you the cannabis company data breach policies that would most benefit your company. Contact Eric and David Rahn, the cannabis insurance specialists, for more information.

Data Breach Increase Directly Impacts Cannabis Businesses

Legalization of cannabis has grown in popularity due to the recreational potential for some. People like the idea of being able to partake in cannabis freely after a long day, or before a night out, similar to the way we freely consume alcohol. For others, cannabis has the potential to help with all sorts of medical conditions from arthritis to cancer. Many states have legalized cannabis through the mechanism of medicinal use. The medical use requirement means that those facilities providing cannabis fall under the umbrella of medical facilities. These medical facilities are required to keep patient records, patient data, possibly insurance information, payment information and more. These facilities are the prime targets for cyber criminals who can exploit network weaknesses and expose cannabis businesses to a data breach.

s2s insurance, eric rahn, cannabis data breach, marijuana, who insures the cannabis industryA data breach is an incident in which sensitive, confidential, or other private date is accessed and/or disclosed in an unauthorized fashion. Data breaches may involve personal health information, personally identifiable information, trade secrets or intellectual property. A company that stores this information such as a medical cannabis provider is legally liable for the protection of this personal information. It is important to have proper security measures to protect the data, but cyber criminals are persistent therefore you’ll need additional protection. Data breach insurance is that additional protection. Marijuana data breach insurance protects business owners from legal liability resulting from this type of breach, whether the information is leaked electronically or by some other means such as a paper file.

Over an eight-year span, healthcare organizations reported 2,149 data breaches affecting 176.4 million records to the federal government, with almost every year bringing an increase in privacy incidents, according to new research.

To conduct their research, they examined all data breaches compiled by the U.S. Department of Health and Human Services Office for Civil Rights from 2010 through 2017. They found that, aside from 2015, the annual data breach tally increased each year, rising from 199 in 2010 to 344 in 2017.

Under the law, healthcare organizations that handle protected health information must report breaches of a certain size to the federal government. But that does not mean that every data breach gets reported or included in the count.

The size of each breach ran from 500 to 78.8 million patient records, with a median of 2,300 records and a mean of 84,456, according to the findings.

Healthcare providers were hit the hardest, reporting 1,503 data breaches that compromised 37.1 million records during the period in question. The number of incidents made up 70 percent of all data breaches included in the tally.
But health plans, which reported 278 data breaches, reported 110.4 million exposed records, or 63 percent of the pie, according to the findings.

Although most healthcare data breaches focused on paper or film, the 410 breaches that emanated from network servers bared 139.9 million records, nearly 80 percent of the total.

s2s insurance, eric rahn, cannabis data breach, marijuana cyber security, lab testing insurance, cannabis insuranceEven the best network security systems can be hacked or compromised in some way shape or form. Often the compromise is due to human error such as opening and clicking on links in a phishing email or inadvertently providing access to an outside threat. There are a number of variables that a business owner or cannabis medical provider can’t anticipate, which is where cannabis data breach insurance becomes necessary. Business owners should work with an experienced cannabis insurance specialist like Eric Rahn of S2S Insurance. As always all polices are subject to policy limits and should be reviewed with a cannabis insurance specialist and your attorney.


Cannabis Cash Creates Threat For Cannabis Business Owners

The cannabis industry is growing year-over-year as individual states legalize the plant. The industry is growing because of legalization, but also because of market demand. People are spending their hard earned cash on cannabis every day, which therein lies the problem. Cannabis cash is not accepted by most financial institutions and leaves cannabis business owners with few options on how to deal with the surplus of cash. When we reference cannabis cash, we are speaking directly to the actual printed currency used in transactions. Because financial institutions are beholden to federal law, most financial institutions frown upon participating in any transaction that involves the exchange or use of cannabis cash.

s2s insurance, eric rahn, marijuana insurance, dispensary insurance, lab testing insurance, cannabis cashAs long as the federal government views cannabis as a Schedule I drug along the lines of heroin and cocaine, financial institutions are at risk of being audited, fined, and possibly shut down for violating federal law if they partake in any transactions using cannabis cash. At S2S Insurance we see the accumulation of large amounts of cash problematic for a number of different reasons. “Cash Only” businesses invite criminal activity because criminals have an opportunity to obtain a large amount of cash that cannot be traced and can be used quickly to avoid capture. Cannabis business owners become targets for breaking and entering, robbery, and vandalism. An attempted robbery whether successful or not can leave a great deal of property damage, from broken windows or doors, to broken equipment, display cases, vaults or point of sale devises. That type of damage is costly to any business owner, not just those in the cannabis industry.

The marijuana business is booming in the US. According to a report from the investment bank Cowen, legal marijuana is set to hit $75 billion in sales by 2030, putting it on par with soda consumption. Marijuana cultivators are now listed on the NASDAQ, have former politicians on their board, and are backed by heavyweight investors like Leon Cooperman.

But for many big institutions, the risks of banking and lending to the cannabis industry under the current federal mandate just aren’t worth it, especially with all the extra paperwork and scrutiny it can generate.

“For cannabis businesses, this means that access to the basic financial products like checking and savings accounts can be elusive,” John Hudak, a senior fellow at the Brookings Institution who studies issues pertaining to marijuana legalization, told Business Insider.

s2s insurance, eric rahn, marijuana insurance specialists, liability insurance for marijuana, dispensary insurance, cannabis cashTyler Beuerlein, a VP at Hypur, an Arizona-based fintech startup that acts as a middleman between banks and cannabis companies, told Business Insider that he believes there are “less than 30” banks willing to do business with the booming cannabis industry in the US.

That means the costs of doing business and remaining compliant with the byzantine patchwork of state and federal laws guiding the cannabis sector are much higher than in any other industry.

Every cannabis business owner that has the “cannabis cash” problem, should take the first step in protecting their business by getting cannabis insurance. Standard insurance polices will not be enough because of the uniqueness of the cannabis industry. Cannabis business owners should be working with experienced cannabis insurance specialists like Eric Rahn of S2S Insurance, to help determine the right risk management strategies for their business.


Cannabis Insurance An Absolute Must For Cannabis Businesses

As a small business owner there are a number of unanswered questions and unknown threats to your business. Many of these unanswered questions can keep you up at night searching for answers. A question that often doesn’t get asked by small business owners and especially cannabis business owners is how much insurance should I have? Not only should you be asking how much, but you should be asking what type? General liability insurance you get at the insurance provider in your local neighborhood won’t work in the world of cannabis. Cannabis businesses need cannabis insurance. The cannabis industry needs an industry specific insurance product to protect the cannabis industry.

S2S insurance, eric rahn, cannabis insurance, testing lab insurance, who insures the cannabis industryThe cannabis insurance industry serves a specific purpose for the marijuana industry because of the design of the policies. Cannabis insurance does not include the same exclusions as traditional insurance policies. Traditional policies often have exclusions for contraband or illegal substances. For the foreseeable future the entire US cannabis industry revolves around an illegal substance. Marijuana or cannabis is listed as a Schedule I drug right next heroin. Marijuana has been legalized on the state level and is gaining support federally, but that does not change the need for specified cannabis insurance to protect your business.

A recent survey by Manta and Insureon reveals just how many entrepreneurs are putting themselves at risk. Fewer than three in 10 small business owners in the survey have a business owner’s policy, the basic business insurance that covers general liability insurance and commercial property insurance to protect you from loss. Even fewer (21 percent) have errors and omissions (E&O) or professional liability insurance, 17 percent have workers compensation insurance, 6 percent have business interruption insurance, and only 2 percent have cyberinsurance.

No matter what type of business you own, you operate under some degree of risk. Sadly, no business is completely immune to lawsuits. Fortunately, however, a variety of insurance options exist to help protect small businesses.

s2s insurance, eric rahn, liability insurance for marijuana, cannabis insurance specialists, marijuana crop insuranceA question you may have is, what type of cannabis insurance do I need? One of the biggest expenses for most business owners is property. Whether you own a store front, a warehouse, computers, and don’t forget about your inventory, you need to protect it all. Cannabis specific property and casualty insurance pays for damages to your business property resulting from a covered loss. This type of policy protects your place of business but also the contents within your place of business. An example would be if there is a fire in your store and you lose furniture, computers, inventory, it would all be covered up to your policy limits.

There are policies that will also cover expenses that protect your business from additional damage after a loss and the money required to keep operating your business until the damage from the loss is repaired. Property insurance is just one example of the type of insurance you should ask your cannabis insurance specialists about. There are also other types of cannabis specific policies such as product liability, data breach insurance, and errors and omissions. Eric Rahn of S2S Insurance puts it very bluntly, “are you covered if the mud hits the fan?” Don’t find out the hard way that you don’t have what you need or you don’t have enough of what you need, contact S2S Insurance today.


Cannabis Insurance Top 5 Mistakes | S2S Insurance

No matter what line of business you are in, you need some form of insurance, that includes cannabis companies. Choosing the right cannabis insurance provider and policy can be a daunting task and mistakes can definitely be made.

Below, Eric Rahn, insurance specialist at S2S Insurance, breaks down common mistakes cannabis related business owners make when choosing an insurance policy and how to avoid them.

1. They don’t purchase insurance at all.

s2s insurance, eric rahn, marijuana insurance, weed, dispensary insurance, cannabis insurance specialistsOne of the biggest mistakes cannabis business owners are making is not having a policy at all. While the wrong policy is problematic, not having any coverage can be devastating to a new or even an established business. Investing in insurance covers the unforeseen and mitigates risk. Whether a cannabis business is faced with vandalism, theft, product liability, employee law suits, management issues, the right policy can save tens of thousands of dollars or even hundreds of thousands of valuable dollars.

2. They don’t purchase cannabis specific insurance.

Cannabis insurance is becoming a very specialized niche in the insurance industry. Not all insurance agents/brokers have the knowledge about the risks in the cannabis industry. Insuring cannabis is not like insuring your house or automobile strictly because of the nature of what you’re trying to insure and how it’s viewed by the government. If you don’t have a policy that is specific to cannabis there may be certain exclusions based on the Schedule I status of cannabis or illegal substances. Those types of exclusions and exceptions can derail a cannabis business owner’s ability to collect on a policy.

3.  They don’t work closely enough with a cannabis insurance specialists

Working closely with someone that knows the cannabis insurance industry is critical when choosing a policy. Cannabis business owners have to ask their agents/brokers questions, lots of questions and the broker/agent needs to be able to answer those questions. Your agent should be asking you questions as well. Risk grows with your business, is your insurance growing with your business? What’s your tolerance for risk? How much can you afford to lose? Are you currently covered to avoid the catastrophic losses that can shut your doors? Those are some of the blunt but required questions cannabis business owners should be discussing and answering with a cannabis insurance specialist.

4. Cultivators fail to buy crop insurance

If you are a cultivator or a grower, you rely on your cannabis crop for your income. Cannabis is agriculture, just like corn, wheat, or soy. Cultivators have to protect their income, therefore they must have cannabis insurance specifically crop insurance. Every year out west in California and Arizona there are wildfires that destroy thousands of acres of land and crops. While we don’t know where and when these disasters are going to strike, history tells us there is a good chance they are going to happen. Cannabis cultivators must be prepared for this unfortunate reality.

s2s insurance, eric rahn, cannabis insurance, liability insurance for marijuana, cannabis recommendations5. Cannabis business owners don’t know whats in their policy

As a cannabis business owner knowledge is power. You have to be aware of the changing laws at the federal, state, and local level. You also need to know your business inside and out. Part of knowing your business is understanding what is and is not in your insurance policy. You have to know what is covered and what is excluded which could include cannabis specific exclusions even within a cannabis insurance policy. If you have cannabis insurance with cannabis exclusions, it may be time to look at another cannabis insurance provider. At S2S Insurance we pride ourselves on our experience and expertise and would be happy to review your policy and your risk exposure to help put your mind at ease.


Cyber Security Critical To Successful Cannabis Business

In this age of technology most businesses have some form of a computer system with laptops, tablets, and servers. The Cannabis industry, like traditional businesses, collect data to determine how to serve their customers better. In some instances businesses collect data to ensure their employees have quality working experiences. If that data is valuable to you as a cannabis business owner, it is also valuable to those who may not have such positive intentions. Cyber security is a field that is growing every day as technological advances are made. With more and more businesses storing data electronically, including the cannabis industry, cyber security is just as important for cannabis business owners.

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Companies as big as Macy’s, Bloomingdale’s, and Reddit have all had their cyber security breached. There are countless other small businesses across the world that are not reported in the media but that have fallen victim to this type of crime. Data breaches can result in the loss of millions, even billions, of private records and sensitive data, affecting not only the company that was hacked, but also the individuals whose personal information may have been comprised. There are multiple types of cyber security attacks and all of them yield similar but different results.

When businesses are attacked, information such as names, addresses, and email addresses are stolen along with payment information. Its not hard to see why consumers and businesses alike would be disturbed by a cyber security failure. Payment and personal information is not the only concern as medical records are also under attack. Health insurers, federal departments of health, and hospitals have all been attacked by hackers searching for information. The United States takes private medical information very seriously and exposure of this type of information violates the public trust.

s2s insurance, eric rahn, marijuana data breach, marijuana business, dispensary insuranceAt least 16 separate security breaches occurred at retailers from January 2017 until now. Many of them were caused by flaws in payment systems, either online or in stores.

Data breaches are on the rise for both retailers and other businesses.

A recent report published by cybersecurity firm Shape Security showed that 80% to 90% of the people that log in to a retailer’s e-commerce site are hackers using stolen data. This is the highest percentage of any sector.

These data breaches are a real danger for both companies and customers and can affect the trust shoppers have in brands.

According to a study by KPMG, 19% of consumers would completely stop shopping at a retailer after a breach, and 33% would take a break from shopping there for an extended period.

If your company stores private information on a computer or a server, your company is legally liable for the protection of this personal information. Cyber Security or data breach insurance protects business owners from legal liability resulting from this type of breach, whether the data is leaked electronically or by some other means such as a paper file. S2S Insurance specialists Eric Rahn strongly urges all cannabis businesses to have a strong cyber security network and to invest in data breach insurance. The rate of cyber attacks on businesses is rising each year and as a businesses owner you don’t want to find out your firewall was not enough and you don’t have the right coverage to cover the losses.


Cannabis Cargo Theft Real Threat to Cannabis Related Businesses

Most any business that has some form of retail merchandise to sell, likely relies upon cargo, transportation, and/or warehouses. Retail goods need to be moved from one location to another and cannabis related products are no different. Where the cannabis related businesses are different is that if that if cargo or merchandise gets stolen, the black market is very extensive and the products are virtually untraceable once stolen. Cannabis cargo theft is a legitimate risk to marijuana related businesses and their ability to turn a profit. A lost shipment of paraphernalia would be a set back and could cause serious financial problems, but even worse would be the loss of a shipment of marijuana related products such as edibles, flowers, plants or oils. If you’ve already paid for merchandise and become a victim of cargo theft, how do you recover  your loss? Cannabis cargo insurance is the best way to protect business against cargo theft once all other precautions are taken.

S2S insurance, Eric Rahn, cannabis cargo theft, dispensary insurance, who insures the marijuana industryCargo insurance provides coverage against physical damage or loss of goods during shipping, whether by land, sea or air. There are a number of inherent dangers involved in shipping, therefore the cannabis insurance specialists at S2S Insurance suggest using a cargo insurance as a staple in your cannabis related business portfolio to protect against cargo theft while in transit or while in storage. Cargo theft is becoming more advanced and requires cannabis businesses to stay ahead of would be thieves. Thieves will create fraudulent businesses to arrange for non-existent pickups and will find other ways to exploit gaps in supply chains by leveraging technology to do so.

Ringleaders Roberto Santos-Gonzalez, 37, and Carlos Enrique Freire-Pifferrer, as well as commercial truck drivers Juan Perez-Gonzalez, 44, and Eduardo Hernandez, 55 were sentenced. They were named with nine others in a 23-count indictment that charged them with participating in a conspiracy that operated from August 2012 to May 2015 and stealing $30 million in high-value merchandise carried by semi-trucks.

Members of the group would reconnoiter warehouse distribution centers run by national companies that distributed products including electronics, clothing, pharmaceuticals and cigarettes. The crooks would watch a center, then follow a semi-tractor and trailer leaving the building. They would steal the tractor and trailer when the driver stopped at a truck stop.

The crooks typically abandoned the tractor less than 20 miles from the truck stop and hooked up the trailer to another tractor driven by a member of their gang. The load would be driven to Louisville, Ky., where plans were made to resell the goods.

s2s insurance, eric rahn, cannabis insurance specialists, cannabis cargo theft, insurance for marijuana“Knowing the tactics that cargo thieves use can help businesses recognize their unique vulnerabilities as cannabis related businesses and prevent potential cargo theft,” explains Eric Rahn, an S2S Insurance specialist. Some of those tactics include identity theft, fake pick ups, misdirected loads, theft of trailer/container, hybrid theft scams and of course any combination of those previously mentioned. In order to help prevent cargo theft, cannabis businesses should conduct their due diligence on all third parties responsible for shipping their cargo, but also take additional safety and security precautions. Even taking the best precautions may not be enough and in those instances. S2S Insurance can help your business before disaster strikes. Working with a S2S Insurance agent before cargo theft, a fire, product liability, or even a workman’s comp claim hits, can save you money and prevent your business from becoming another failed start up.


Data Breach Issues Create Problems For Cannabis Business Owners

As a cannabis business owner you may ask yourself why data security is important and what’s the real risk? The reason data security is so important is directly tied to the risk of associated with a data breach, which is money. A data breach for even a cannabis company can have costly financial consequences. Data security is all about financial loss. Data is an asset that must be protected. Loss of clients/customers private information can lead to fines, lost sales, judgement, damages or more. Often the financial impact is not always immediately known depending on how soon the breach is discovered if it wasn’t prevented. s2s insurance, data breach, hacking, testing lab insurance, cannabis insurance, cannabis doctor insurance

For cannabis related businesses a data breach could have an even greater impact if a the business is considered a health care provider. If you are a cannabis dispensary or testing lab in a state where marijuana is only legal for medicinal use, those businesses may be under greater scrutiny and subject to greater regulations when it comes to a data breach. These business will have personal information such as home addresses and phone numbers, but also medical information. Patients’ medical history could be used to blackmail them if they don’t want their medical history publicized, making the information specifically valuable. Specific provisions of the HIPAA Act protect health care information from fraud and abuse, and when violated carry heavy penalties.

Providers continue to struggle with cyber-security, and phishing expeditions are a frequent culprit. They can result in a painful hit to a company’s bottom line and negative publicity exacerbated by lawsuits. Healthcare organizations spend more than $400 per record lost or stolen after a data breach, the highest of any industry reviewed in a recent analysis by IBM Security.

A study by Accenture and the American Medical Association found four out of five doctors have experienced a cybersecurity attack. The majority involved phishing, followed by computer viruses.

In a Mimecast and HIMSS Analytics survey, providers ranked email the No. 1 source of potential data breaches. More than 90% of respondents said email was critical to their organization, and eight in 10 said they use it to send personal health information, typically to other providers. s2s insurance, data breach, cannabis insurance, marijuana recommendations, dispensary insurance

Financial loss and regulatory concerns are key factors to protect against a data breach, there is also the issue of loss productivity. Employees will in most instances be required to deal with customer issues and concerns once the breach is made public. Data loss can also result in certain programs and applications not working properly or not working at all. Certain security features may be disabled and require specialists to update and re-secure the network. The reality is even the best data security systems are vulnerable. While it is very important to have a strong data security system in place, S2S Insurance strongly suggests maintaining a data breach insurance policy to mitigate the risk. Data breach insurance protects business owners from legal liability resulting from this type of breach, whether the information is leaked electronically or by some other means such as a paper file. It is important to remember that policy limits do apply and to review your policy with a trained S2S Insurance agent and an attorney. Do not let hackers cost you hundreds of dollars per file due to not being prepared. Have a strong data security system in place and have the peace of mind with a data breach insurance policy.


How A Data Breach Can Impact Your Cannabis Business

When we hear the term “data breach” we are trained to immediately check our online presence information to determine if we’ve been hacked. We hear the term frequently in the news about a massive data breach and we are reminded of our vulnerability in this new age of technology. A data breach typically involves an unauthorized or illegal viewing, access to, or copying of data by an individual or group. The purpose is to steal as much useful information as possible or publish that information in a public forum.

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A data breach can pose a major threat to a cannabis business

LabCorp is a one the largest medical diagnostic companies in the nation with the resources to have maximum data protection, yet they still may have been exposed. The danger with a company such as LabCorp experiencing a data breach is that their customers and patients’ medical information may have been exposed. Besides medical information it is possible that payment information and internal financial information about LabCorp itself has been seen, accessed and or stolen. LabCorp will have to deal with the exposure of patients private health information but also the reality that they could be vulnerable to further attacks aimed at stealing money or access to credit.

LabCorp, one of the nation’s largest medical diagnostics companies, is investigating a security breach that could have put health records of millions of patients at risk. The company, in a filing with the Securities and Exchange Commission, says it detected “suspicious activities” on its network over the weekend of July 14 and “immediately took certain systems offline as part of its comprehensive response to contain the activity.”

“This temporarily affected test processing and customer access to test results on or over the weekend,” the company said. “Work has been ongoing to restore full system functionality as quickly as possible, testing operations have substantially resumed today, and we anticipate that additional systems and functions will be restored through the next several days. Some customers of LabCorp Diagnostics may experience brief delays in receiving results as we complete that process.”

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Marijuana Prerolls

Some reading this may wonder how this pertains to the cannabis business, but this has everything to do with the cannabis industry. The cannabis industry is unique in the fact that it exists in both the medical world and the retail world. Some states have legalized marijuana for medicinal use only, others for recreation. Some cannabis businesses may have some form of medical information for patients if they are a medical marijuana provider. Other businesses may have less critical data but it is still dangerous in the wrong hands, such as names, addresses, phone numbers, and emails of customers which if published could put any number of people at risk if that information is exposed.

There is also the very real threat of identity theft and people stealing identities to gain access to medical marijuana. If your company stores this type of information on a computer or server, your company is legally liable for protecting this information from a data breach. Data breach insurance protects business owners from legal liability resulting from a data breach, whether the information is stored electronically or by some other means such as on paper.  As always it is important to remember that regardless of what type of 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.