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How Cannabis Businesses Deal With Cash Concerns

A cannabis business owner has many concerns when starting a business, such as hiring employees, quality of products, and marketing to name a few.  The one aspect that must be considered early on is how cannabis businesses deal with cash.  Not just making money but how will customers pay for the product, where will money be stored, how will it be transported, what bank will the business use? These are questions that traditional businesses have to answer as well, but typically for those businesses it’s as simple as filling at a form at the local bank or credit union. For a cannabis related entity processing transactions and money is far from straight forward. Most banks and credit unions which are regulated by federal agencies refuse to accept money from cannabis related businesses. The banking industry’s refusal to do business with the cannabis industry requires cannabis business owners to work in a world of cash only transactions. Cannabis and cash are for the foreseeable future tied together at the hip forcing many to ask the question how do cannabis businesses deal with cash.

marijuana insurance, marijuana business, medical marijuana, liability insurance for marijuanaFor many cannabis businesses being forced to work only with cash, there are logistical problems and extreme safety concerns.  The logistics begin with basic payment methods.  Business owners can only accept cash, meaning debit and credit cards can’t be used, customers can’t use checks, therefore the only form of payment accepted in most cannabis businesses is cash. A business may be able to get away with claiming to be a “retail sales” company as a designation on a bank form, but eventually banks and credit unions will question the large number and amounts of cash transactions and may close the account. Cannabis business owners are faced with the reality of housing substantial sums of cash onsite, or having to transport tens of thousands to hundreds of thousands of dollars each day. Many business owners are forced to purchase large vaults and safes to store cash onsite, and pay for armored vehicle services to move large sums of cash to other facilities for storage. Being forced to manage these large sums of cash constantly creates additional expenses, but also creates additional risk.

Without a banking account, some cannabis businesses have to fund everything from payroll to taxes in cash. Those companies also cannot accept debit or credit card payments, apply for mortgages or even get small-business loans — all matters that are regulated by the federal government.

It also leaves the businesses with stacks of cash piling up in their offices — and criminals have taken notice.

Last spring, police in Phoenix estimated that six area medical marijuana dispensaries were robbed in a two-month span, according to local media reports. The year before, June was a particularly brutal month with several robberies or attempted robberies in Denver, Los Angeles, Detroit and San Diego.

The violence culminated with the death of an Aurora, Colorado, dispensary security guard, who was shot during a robbery on June 18, 2016. In Riverside, California, the next week, two dispensary workers were wounded in separate holdups less than 48 hours apart.

Cannabis Businesses deal with cash only operations

Cannabis businesses dealing in cash is not a secret. Criminals are aware that these different cannabis businesses deal in cash and very large amounts of cash on a regular basis.  There are countless examples of robberies and robbery attempts on cannabis businesses for this very reason. The reality is, if you are starting a cannabis business, you will have to deal with large amounts of cash and the risks associated with having large amounts of cash on hand. While each state has it’s own rules regarding marijuana and it’s legality and how businesses can operate in that state, cannabis is currently illegal on the federal level. As long as cannabis remains illegal on the federal level, the connection between legal marijuana and cash will remain closely affiliated. Business owners will have to protect their businesses from the various risks such as vandalism and theft by working with S2S Insurance Specialists for not only your property insurance needs, but all your cannabis insurance needs.

read more at washingtontimes.com

Product Liability For Cannabis Products Explained

Product liability for cannabis is a form of risk mitigation cannabis business owners should all consider. Each state has varying laws regarding product liability, but it typically holds manufacturers and retailers alike accountable for issues that arise. Typically these cases cite strict liability, negligence, misrepresentation of theories, and/or express or implied warranties. The purpose of this level of inclusion is to place pressure on retailers to ensure manufacturers are using the highest quality products. Product liability for cannabis is most relevant for marijuana infused products such as edibles or beverages where illness post ingestion is possible. Cannabis business owners such as dispensaries should keep in mind that product liability cases are some of the most expensive cases for a business to face.

One of the first steps in protecting against product liability is adequate documentation. Retailers should look to label their products with detailed information very similar to the way pharmaceutical prescriptions are labeled. Labels should include information such as content description, potency, issue date, instructions for use and storage and expiration an date. The label should also include the common sense warnings such as “avoid eye contact,” “keep away from children” and “do not use while operating a vehicle”.

cannabis businesses, cannabis lab testing, cannabis lab insurance, marijuana insurance, liability insurance for marijuana

It may be a surprise that it’s not just the growers and manufacturers who are held liable for defective products – retailers are also at risk. If a consumer purchases a defective product from a retailer and becomes ill, that dispensary owner can be held liable, even if there was no prior knowledge of defects in the product. The rationale behind imposing liability on dispensary owners is that it will pressure them to vet manufacturers they do business with more carefully and only work with businesses that have a proven track record of making high quality, safe products. While states tend to favor those who had no part in the manufacturing of a defective product, there is still risk of liability.

Cannabis business owners should implement the product life cycle concept strategy to help evaluate product liability. The product life cycle applies biological knowledge to production processes. The product life cycle focuses on introduction, growth, maturity and decline phases. By treating each part of the product’s life as an individual stage (pre-production, production, and post production), businesses can more easily identify sources of liability and address these concerns in their specific stage of the process.

Another area where cannabis business owners can help themselves is product testing. Retailers should be using manufacturers that use third party testing for all batches. Testing should be checking for quality and verifying that the product is free of contaminants such as molds or pesticides. After testing, small samples of tested batches should be available in case a controlled sample is requested at any point. Coupled with testing, product tracking should also be used in order to easily identify a specific lot in case of a product recall. As a cannabis insurance company we look to provide the cannabis industry with the necessary information to mitigate risk and help your cannabis business succeed.

read more at cannabis.net

Quality Employees, Cannabis Insurance Protects Cannabis Businesses

One of the keys to success for any business is who you hire. That premise is no different for a cannabis business. A cannabis dispensary’s front lines are the budtenders hired to handle the day-to-day operations of the dispensary. Knowledge and customer service oriented staff can be the difference between a successful dispensary and a failed cannabis business. Quality employees matched with cannabis insurance are keys to protecting your investment.

The cannabis industry is a competitive field with many businesses offering similar products, quality customer service helps to build a reputation. Budtenders help and assist different types of customers each day and are responsible for providing an experience the customer would like to replicate. A happy customer will return and use word of mouth to organically help your business grow. Hiring staff with customer service experience is critical in the cannabis industry.

Cannabis business owners must also be aware of federal, state and local laws, and employees are not exempt. A staff that is trustworthy and knowledgeable on various compliance issues is crucial to the success of any cannabis business. Dispensary owners should provide continuing education to employees, to make sure they have the necessary information to help the owner stay in compliance.

Budtender, dispensary insurance, insurance for cannabisThe budtender often provides one of the first impressions a patient or consumer gets about a cannabis dispensary, and how he or she treats visitors is crucial to the success of the business.  Cannabis dispensary budtenders are oftentimes a valuable resource for medical marijuana patients and recreational consumers who are looking to them for guidance on which products to try.

A marijuana dispensary is a retail business, in order for that business to succeed, employees must be able to sell. A good employee knows how to read a potential customer and sell that customer on filling a particular need. Cannabis business employees need to know how to utilize proper sales techniques, make proper recommendations, and up sell customers. The idea of selling should not be taboo to cannabis dispensary employees. Good salesmanship will make your company profitable sooner.

With owning a cannabis dispensary and working in the cannabis industry, there are multiple things that can go wrong during the course of a day. As a cannabis insurance agency, we take as many of these risks into consideration as possible. Whether it’s taking steps to improve security, prevent theft, avoid fire hazards, practicing safe techniques when working with product or properly checking identification when someone is making a purchase, safety in the workplace must be on the forefront of the employee’s mind. An option for cannabis owners is to look for certified staff, employees who are certified have gone through safety and security training, which may be an invaluable resource to your cannabis business. As a business owner, take the time to think about who you are hiring and the value that employee could bring to your cannabis business. Marijuana dispensary staff need to be dependable, knowledgeable, and safety oriented.  Quality budtenders can make or break your marijuana dispensary. As a cannabis insurance company we look to provide the cannabis industry with the necessary information to mitigate risk and help your cannabis business succeed.

read more at leafly.com

State Regulations Impact On Cannabis Businesses

As a cannabis business owner, awareness of the risks associated with the industry is absolutely imperative. The most looming of those risks is the federal government and the federal agencies tasked with enforcing federal law. US Federal law considers cannabis a Schedule 1 controlled substance. Agencies like the DEA, FBI, or even the ATF could come kicking down your door at anytime depending on marching orders from Washington D.C.. A cannabis business owner assumes certain risks when choosing to do work in the cannabis industry and must understand state regulations as well.

Destroyed Cannabis, cannabis crop insurance, who insures the cannabis industry, cannabis insuranceFederal enforcement is not the only risk cannabis owners need to be aware of. Each state has their own regulatory practices that could have a negative impact on a cannabis business as well. Many states have only recently legalized some form of marijuana use and or sale. States are in the process of developing regulations for an industry that was previously underground with no rules or regulations. California for instance instituted business requirements that were set to take effect on July 1, 2018.  Those requirements included the introduction of lab testing, packaging, labeling, and THC limits in products offered for adult-use. Cannabis business owners were given six months to transition to the new rules, if they were not able to comply, they would be responsible for destroying any product that did not meet the new rules and document the product destruction.

On Sunday, the stringent new “seed to sale” tracking standards for California’s cannabis market went into effect. Overnight, thousands of pounds of cannabis products worth hundreds of millions of dollars suddenly became noncompliant. Now, dispensaries are in the process of destroying them, in an event the industry has dubbed the “Marijuanapocalypse of 2018”… Drayton estimates Los Angeles dumped tens of thousands of pounds of product, alone.

In anticipation of this pending doom’s day scenario business owners needed to have a plan in place. California gave owners a six month window to sell what they had without the restrictions of the new rules. Business owners would have been smart to offer the non-compliant products at deep discounts as frequently as possible to help mitigate the loss. This is a rare particular instance where the business owners knew what the catastrophic event was going to be, and knew when it was coming. That sort of information is rare in the world of risk mitigation but when you have it, use it.  There is no way to accurately track what was lost in California this past week, but estimates are significantly high. There is no insurance product available at this time to protect a cannabis business owner from state mandated destruction of inventory, but it is important that business owners are aware of the looming risks of regulation, and take any necessary precautions to protect themselves in the face of enforcement.

Unfortunately there is no cannabis insurance product to protect against the general liability associated with state regulatory mandates. The cannabis industry is being presented with risks that are not common in traditional business sectors, but must still be accounted for. Like traditional business models, insuring your business against predictable risks based off past occurrences is the prudent move for any good business owner.

read more at hightimes.com

Understanding the Regulatory Risks Associated with Owning a Cannabis Business

As a cannabis business owner, looking over your shoulder may have become an habit. It is the same habit of anyone that participates in the illicit market, however you entered into the cannabis industry because your state has legalized cannabis. The truth is though, that regardless of whether your state has legalized a medical marijuana program or even possibly an adult-use market, cannabis is still illegal. You are not looking over your shoulder to see if local authorities are coming but instead if agencies like the DEA, FBI or in the instance of a brewery in San Francisco, whether the Alcohol and Tobacco Tax and Trade Bureau has shown up.

Black Hammer Brewing, cannabis insurance, who insures the cannabis industry, insurance for cannabisBlack Hammer Brewing out of San Francisco came up with the very smart idea of brewing a beer with cannabidiol or CBD, a cannabinoid found in both the marijuana flower and in hemp. Black Hammer was using hemp derived CBD. It is a non-psychoactive biological compound that is believed to be the main medicinal compound found in the Cannabis sativa plant. It works as an anti-inflammatory as well as having some other medicinal properties. CBD products are offered around the country in many wholesale stores like Lucky Brands. Adult-use cannabis is even legal in California, but that did not stop the federal agency from stepping in and forcing Black Hammer Brewing to stop all production of their CBD beer and offering it for sale to their customers.

Forcing the brewery to stop production of the CBD beer did not even have to do with the Schedule 1 status of cannabis, which is what makes cannabis as illegal of a controlled substance as there is here in the United States. It instead had to do with the fact that Black Hammer had not applied to add either CBD or some of the terpenes they were using in their beer for approval with the Alcohol and Tobacco Tax and Trade Bureau. Since the prohibition of cannabis has been in place here in the U.S. for over 80 years, cannabis and the substances that can be extracted from it are simply not accounted for by regulatory bodies. The owner of Black Hammer Brewing, Jim Furman, believes though that the future of one of his top selling beers depends very much on the federal legalization of hemp.

“We believe that future approval of our formula may be dependent on hemp reclassification by the federal government/DEA,” he wrote in an email. “Our guests love the CBD beers, and we’re pretty sad that we have to stop producing them,” he says. Of the eight CBD beers he has created, Furman considers Hippie Hill, an imperial IPA, to be his greatest success. Brewed with Tahoe OG terpenes, “it’s unmistakable. So fresh,” he says. “It’s got the most dialed-in cannabis flavor profile.”

There is no cannabis insurance that covers the sort of general liability associated with the illegal status of cannabis or the regulatory limitations caused by the extended prohibition of cannabis. However we are interested in spreading awareness on all of the risks associated with owning a cannabis business or incorporating a cannabis product into your inventory. In the cannabis industry, you must account for certain risks that are not common in traditional sectors.

read more at sfchronicle.com

Property and Casualty Insurance for Cannabis Dispensaries

Just like any other business there is an absolute need for insurance for cannabis dispensaries. Anytime an individual purchases a new piece of property, one of the first orders of business is getting that property insured. For some forms of property the insurance is required, for others it is optional, but no less important. All forms of insurance are put in place to mitigate risk, including property and casualty insurance.

For those entering the cannabis industry or already established in it, the same principles of risk mitigation still apply. If you own a dispensary or a grow operation it is absolutely imperative that you protect your property against the various perils that pose a threat to your operation.  Property and Casualty insurance in the cannabis industry protects the physical structure of your place of business, but also protects the contents inside including office equipment, computers, inventory, and other items vital to your operation.

BAKERSFIELD, Calif. – Another fire at a marijuana dispensary under investigation. It is the second fire at a marijuana dispensary in the last few days.

The latest happened early Monday morning at the Golden State Hempire Collective in east Bakersfield.

Fire officials haven’t determined the cause but the owners believe the business was set on fire. Employees said someone set the back of the building on fire.

About two and a half miles away, a similar scene Friday morning. The Green Frog Health Center was set on fire by a stolen car that crashed into the building, burning four businesses and causing $250,000 of damage. Fire officials determined it was was arson.

Back at Golden State Hempire, the owners work on plans to rebuild. Damage there is pegged at $60,000. Employees say they hope this trend doesn’t continue.

Property and Casualty Insurance provides insurance to cover property, equipment, and risks from acts of others. In the example above, the damage was caused by suspected arson. As a business owner you cannot predict if a person or group will target your business in this manner, but you can plan against it. P&C insurance protects against common perils such as fire, lightning, explosion, implosion, aircraft damage, riots, strikes and terrorism. Business owners must look to avoid being surprised by unexpected situations  which could result in destroyed inventory and costly damage with no way to recover the loss.

The two fires in the story above caused over $300,000 in damage in the blink of an eye. If the owners of these establishments have the proper insurance for their cannabis dispensaries, they have a greater likelihood to recover and become profitable again. If the owners don’t have insurance and have to pay out of pocket, they may never recover. It is also important to remember that regardless of what type of property and casualty 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 a business owner, if you are going to invest your time and money into an endeavor such as a cannabis dispensary, it only makes sense to protect that investment against the unforeseen.

read more at kget.com

Understanding Insurance for Cannabis Businesses with S2S Insurance Specialists

Source: The National Marijuana News

Eric Rahn of S2S Explains How Cannabis Companies Can Mitigate Their Risk Despite Schedule 1 Status

TNMNews had the opportunity to meet with and interview Eric Rahn of S2S Insurance Specialists at the Phoenix Park Hotel for the NCIA Lobby Days event in Washington D.C.. Mr. Rahn is a member of the NCIA and joined the cannabis industry three years ago identifying a great need for risk mitigation within the sector. We were fortunate that we were able to interview Mr. Rahn first during the event as his obvious experience and knowledge set an excellent tone for the event and let us know what to expect from the professionals we would be speaking with.

What is only growing faster than the Cannabis Industry? If you said risk, you are spot on. Eric Rahn started his career in the casino gaming industry becoming very familiar with working within a regulated industries. Seeing the rapid growth of the cannabis sector he decided that their was a void of qualified international insurance brokers in this emerging sector. After identifying that many cannabis companies, both Public and Private associated within the cannabis industry were facing unmitigated in securing the proper insurance risk due to the Schedule 1 status of cannabis. He not only felt he had the knowledge and experience to help, but also that the movement needed all the help it could get to push the legalization movement forward. He then made the transition into the cannabis industry by establishing S2S Insurance Specialists and joining the NCIA.

As you listen to the interview, you will hear that he has adopted the seed-to-sale concept of tracking cannabis businesses from the planting of the seed to the ultimate sale of the product. By examining the industry in this manner he was able to identify the unique risks associated with each business. Hence the name of his company, S2S Insurance Specialists. He has identified the four major areas of risk the cannabis industry faces as banking, the IRS tax code 280E, interstate transportation and of course a lack of liability insurance. His number one suggestion is that a cannabis company makes sure it is speaking with a certified insurance broker that is familiar with the cannabis industry and its unique risks, as many brokers are not yet educated on this particular subject matter.

Mr. Rahn suggest any company raising money, bringing in outside investors or trading on a stock exchange acquire Directors and Officers Liability. Also any company selling cannabis products should consider Product Liability Insurance. There may be a lot of confusion surrounding how cannabis business owners can mitigate their risks due to the Schedule 1 status of cannabis, however solutions are out there. Cannabis entrepreneurs simply need to make well informed decisions.

We want to thank Eric Rahn for taking the time with us to address questions and provide this much needed information concerning the liability of owning a business in the cannabis sector. If you would care to reach out to Mr. Rahn and S2S Insurance Specialists, please go to S2SInsure.com or you can reach them at their various offices listed below.

Boca Raton (954) 790-6604
Coconut Grove (305)-442-1500
Denver (720)-726-6147