The cannabis industry is highly regulated, and businesses that operate within the industry should understand the specific types of risks they have and find effective ways to mitigate those risks. Outlined below are the most common hazards and risks that businesses in the cannabis industry might encounter.
Understanding these risks can help you determine what your cannabis insurance needs are and what actions your company can take to further minimize the risk of financial loss from loss of inventory, medical costs, legal battles and other risks.
The Top Cannabis Industry Hazards and Risks
Every cannabis company should assess their own hazards and risks as no two companies are the same. The cannabis industry has biological, chemical and physical hazards that are important to understand, along with the risks of product tampering and theft. There are stringent laws and regulations that businesses within the cannabis industry must abide by as well.
Employees that work in grow operations may be susceptible to certain risks such as mold and allergens while on the job. Physical contact with marijuana plants or mold may cause adverse effects such as skin irritation, nasal congestion and wheezing.
Dealing with claims of harm caused by your crop or finished products can become incredibly costly and often crippling for small businesses that do not have cannabis insurance.
You can also minimize the risk of biological hazards by implementing health and safety practices with your crops and encouraging employees to wear personal protective equipment (PPE).
Chemicals such as carbon dioxide and carbon monoxide emissions are hazards for certain types of organizations within the cannabis industry. Low air quality may be a concern in certain work conditions as well.
Additional types of chemical hazards include disinfectants, pesticides and corrosive chemicals. This is nothing out of the ordinary for many types of businesses that rely on growing crops.
You can minimize your company’s risk regarding chemical hazards by educating your employees about safety practices and providing them with the necessary PPE.
Every cannabis company should also assess the specific physical hazards their company may encounter within their daily operations. This could be in the form of electrical, compressed gas or fire risks, among many others.
Many physical hazards often get overlooked, such as working at extreme heights without the provision of necessary safety equipment. It is the employer’s responsibility to provide a safe working environment. Otherwise, they could be vulnerable to high costs related to injury and illness.
Product tampering can occur at the manufacturer, in the store or after the sale. In any case, cannabis companies may be susceptible to costs related to medical and legal expenses, regardless of the legitimacy of the claims made against your company.
Your company should have a process in place to reduce the risk of product tampering and should insure itself with cannabis insurance coverage that protects against costs related to product tampering claims.
While you may have full faith in your employees, the fact is that employee theft can occur to anyone and often happens despite employee screening and other preventive methods. Of course, theft can come from outside of your business as well.
The cannabis industry is particularly vulnerable to theft from employees, shoplifting, break-ins and robberies. By first understanding the risk posed by potential theft of inventory (or finances), you can then plan ahead to prevent and respond to theft within your company.
The cannabis industry requires operations to obtain the proper licensing and comply with local, state and federal regulations. It is important to ensure your company has the proper licensing and understanding of all applicable regulations. Companies that do not meet all regulations or operate without the proper licensing are subject to fines and potential closure.
How Can I Reduce My Cannabis Company’s Risk?
After you have identified the hazards and risks specific to your business, you can then move toward finding practical solutions to mitigate those risks as much as possible.
Businesses are responsible for ensuring their place of work is safe and meets all regulatory requirements. The best way to minimize your company’s risk is by identifying hazards and receiving a personalized cannabis insurance policy to protect you from large out-of-pocket costs. This, in addition to taking the necessary safety precautions, can provide your business with more long-term certainty.
Speak With a Representative at MFE Insurance
Does your business operate within the cannabis industry? MFE Insurance helps cannabis businesses mitigate their overall financial risk so they are not vulnerable to high out-of-pocket costs.
If you have questions or concerns, the professionals at MFE Insurance can answer and address them and craft a personalized insurance plan based on your company’s specific insurance needs.