With the recent legalization of recreational cannabis use in Michigan, many people have decided to start a cannabis dispensary to capitalize on a new and untapped market. Being a new industry, there is not a whole lot of advice out there about the best practices for starting a successful dispensary and the need for dispensaries. What is certain, though, the need for liability insurance coverage. Any business needs insurance, and cannabis dispensaries are no different. However, dispensaries face different legal issues than most small businesses, meaning that their insurance needs are different.
If you run a business, you may already have insurance. However, it is possible that the policy you have will not cover you in the ways you need it to. This is especially true if you only have a general liability policy. While general liability protection is good, it will not protect you from every liability involved in running a dispensary.
Challenges Of Running A Cannabis Dispensary In Michigan
A dispensary has all of the same liabilities as any other small business: workers’ compensation, general liability, product liability, employment practices, cyber liability, etc. What complicates things are the added legal restrictions around the product and the newness of the industry in Michigan.
New Users Come With New Liabilities
Since cannabis is only newly legalized, there will be many people with no experience with cannabis products who will decide to try it for the first time. They will not know how cannabis will affect them, and they may consume too much at once or have unpredictable reactions to it. They may not take the same safety precautions as someone who has been using cannabis for years.
Liabilities With The Product
That means product liability could be an even bigger problem for a dispensary than for most small businesses. Additionally, despite the best precautions, there is always a chance that a minor may slip through the cracks and manage to buy product from your store. If this occurs, the business will be held liable.
Applying Varying Insurance Coverage To Your Business
We have already mentioned product liability insurance, which protects you in the event that your product causes harm to someone. General liability insurance is necessary as well. General liability protects you in the event of personal injury claims, property damage, copyright infringement claims, and other liability situations.
General liability insurance functions as a sort of umbrella coverage that is meant to protect you from all the things that do not fall into other specific categories of liability. If someone trips and falls in your dispensary, general liability insurance is what protects you in the event of a lawsuit.
Cannabis dispensaries also need cargo insurance. This protects you in the event that your product is lost, damaged or stolen before it can arrive at your dispensary. A cargo policy will pay for replacement product.
Cyber insurance is another important policy, covering you in the event of a data breach. Since you will undoubtedly be accepting payments with credit or debit cards, this kind of protection is crucial.
Protecting Your Product No Matter What
As any farmer can tell you, agricultural products can be fickle. Bad harvests can make it impossible to sell enough product to keep your business afloat, while huge harvests can actually drive prices down. Both of these situations present financial problems for your business.
All sorts of things can harm your product. Natural disasters can wipe a crop out. Poor growing conditions can lead to inferior product. Shipping accidents happen both when the product is being shipped to you and when you are shipping to someone else. Sometimes, the product will simply go bad.
Because of these possibilities, you will need liability insurance that provides specific coverage for these situations. An insurance policy that is tailored to the needs of a cannabis dispensary can prevent financial ruin when problems arise with your product. As with any sort of agricultural product, it really is not a question of “if”, but “when.” Eventually, something can happen that may impact your business legally or financially, and it could be disastrous if you are not protected.
Speak With Professional Cannabis Insurance Brokers
That is where we come in. At MFE insurance, we have crafted insurance policies with cannabis businesses in mind. We know the kinds of challenges that your business faces, and how they differ from other small business risks.
We want to see you succeed, and that means that we want to protect you from the many different things that kill small businesses. Our cannabis insurance policies will cover you from all the standard things a business needs coverage for, but we will also insure your unique product and income.
The only way to ensure that your business is protected from the unexpected and unpredictable risks that it faces is to acquire a comprehensive insurance package. If you do not have a cannabis insurance policy, contact us today. One of our agents will gladly help you to select an insurance package that is right for you.