The marijuana industry is growing at a faster rate, and more and more entrepreneurs are joining the marijuana industry. However, business operations in the marijuana industry involve some level of risk factor, for example, issues regarding legality, lawsuits on products, and loss or destruction of property. Such risks have to be covered by proper marijuana insurance coverage by the business. Here, in this article, we will explain how you can select the suitable policy for your marijuana business.

Understanding Cannabis Insurance

Why Cannabis Insurance Is Important

Cannabis companies are special risks because of the legality and regulation problem of the business. Mainstream insurance providers won’t cover cannabis companies because of federal regulation. Thus, specialty cannabis insurance must be purchased for companies who would like to insure their property, employees, and clients.

Typical risks of the cannabis business

• Regulatory Compliance Issues – They need to adhere to the state and local laws, and failure to do so will lead to shut down or a penalty.
• Product Liability Lawsuits – When the cannabis product is harmful, lawsuits will be fought against the company.
• Property Graffiti and Theft – Cannabis companies are susceptible to theft since they handle inventory that is valuable.
• Cybersecurity Risks – Online commerce and retention of customer data put companies at risk of cyber attacks.
• Injuries to Employees – Employees who work in the grower, manufacturer, and retail industries may get hurt and thus workers’ compensation insurance is required.

Kinds of Cannabis Insurance Coverage

General Liability Coverage

General liability coverage protects companies from bodily injury, property damage, and adverting injury litigation. It is a type of insurance policy all cannabis companies must have.

Product Liability Coverage

Since the product is described as acting differently, attorney cost and settlement defense from product liability insurance insures against the claim of sickness, allergy, or misbranding. 

Property Insurance

The inventory, equipment, and structures are covered by the company from fire, acts of nature, and burglary. Whether any business it shall be operating like dispensing shop, grow shop, or processing business, the said kind of property insurance will be insuring the business into stability of money.

Crop Insurance

For farmers, crop insurance shields them against nature’s destruction, fungus, pests, and other risks causing economic loss.

Workers’ Compensation Insurance

Cannabis enterprises have workers exposed to workplace hazards. Workers’ compensation insurance guards employees from medical expenses, lost time pay, and rehabilitation charges for injuries on the job.

Commercial Auto Insurance

For companies that are involved in the transportation of cannabis products, commercial automobile insurance provides coverage for accidents, loss of vehicles, and liability for transportation.

Cyber Liability Insurance

E-commerce has required customer information to be insured by cannabis businesses. Money loss due to hacking, system failure, and data theft is provided for under cyber liability insurance.

Choosing the right cannabis insurance

Finding Your Business Risks

There will be weaknesses in every business. A lab or grow facility has different needs than a dispensary. Do a risk assessment to identify what type and how much insurance your business will require. 

Buy an Industry-Specific Insurer

Not every insurance company insures cannabis businesses. Use an insurer that operates specifically in the cannabis market, as they are extremely familiar with the intricacies of the business and can tailor solutions.

Verify State and Local Compliance Requirements

Insurance for cannabis businesses is different from state to state. Your policy should be at least as compliant as state requirements to not have any compliance issues.

Compare Coverage Options and Prices

Various insurers provide varying protection and costs. Compare to achieve a balance of protection and cost. While cost consideration is extremely critical, absence of good protection translates into loss of money when claims are filed.

Choose All-Round Protection

The cannabis policy should ideally cover various types of risks, such as loss or damage to property, liability, employees’ cover, and cyber attacks. Several policies under one company might give cost benefits and additional cover.

Read Policy Limitations and Exceptions

Exceptions are found in certain policies that might expose your business to risk. Read terms and conditions so you know what is not covered.

Seek professional advice

It is advisable that you consult an insurance broker or attorney with experience working with cannabis so they can guide you in making the right decision on the policy.

Steps to Get Cannabis Insurance

Step 1: Determine Your Business Needs

Determine the specific risks your cannabis operation is faced with and the coverage level required to counter them.

Step 2: Shop Around for Cannabis Insurance Providers

Identify insurance providers offering cannabis insurance and ask for quotes to compare policy terms.

Step 3: Customize Your Policy

Collaborate with an insurer to create a policy that suits your business’s specific risks and complies with regulatory standards.

Step 4: Read and Sign the Policy

Carefully read conditions, terms, and exclusions while purchasing your insurance policy.

Step 5: Renew and Update Coverage

As your operation grows, your insurance may also change. Update and modify your policy from time to time to guarantee protection.

Conclusion

Obtaining the right cannabis insurance is important so your company is protected from monetary loss and litigation. Understanding your specific risks, consulting with experts in the insurance industry, and selecting coverage that is broad will make you a success in the future in the cannabis business. Shop your coverage, shop your quotes, and obtain a solid policy for your company’s needs.