According to The Arcview Group, an organization of cannabis industry investors, consumer expenditures on the drug could reach $23.4 billion in 2022. Business Insider also reported last year that the cannabis industry is expected to be worth more than the GDP of nine states in the United States. In 2018, investors also injected roughly $10 billion into the marijuana industry in North America. There’s no doubt that the cannabis industry will keep growing.
As small business dispensaries open up and explore the market, there are important things they should be aware of. All businesses need to protect themselves with insurance, and with a target on their back due to the national semi-legal status, dispensaries would be wise to seek protection. General liability insurance, for example, offers protection against claims of property damage and bodily injury, including those involving third parties.
This type of insurance can be especially beneficial to marijuana business owners. Given that different forms of the drug — which remains illegal in many states — continue to be created and the industry keeps growing exponentially, it’s important to be aware of different available options.
Here is a guide on more cannabis industry trends dispensaries can take advantage of.
Craft Producers Are Gaining Traction
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The craft cannabis industry is expected to expand significantly, and the growth of the artisanal beer business has often been pointed to as justification for this reasoning.
Many studies have shown the craft beer business has gained strength for two major reasons. Firstly, people are typically prepared to spend more money on locally-produced beer (microbrews) that is frequently of a higher quality. Additionally, government regulations often give strength to microbreweries and provide them with sufficient marketplace access. From 2008 to 2016, the number of breweries in the U.S. grew sixfold and employment ballooned by 120%, according to The Atlantic.
Designing a Market Like Micro-Breweries or Wineries
Much like with microbreweries and wineries, consumer preferences have often been revealed to progress roughly in tandem with the legal marijuana market. There are thousands of distinct strains of cannabis now available, and their effects range from relaxation to euphoria. There are even Kosher brands with 20% THC (Tetrahydrocannabinol, a cannabinoid often found in marijuana products). This proportion of THC is considered to be slightly more than the average strain contains.
Avoiding the Oregon Problem
When states become negligent in terms of enforcing regulations, supply gluts can lead to small producers going bankrupt. In Oregon, uncontrolled overproduction has caused a significant drop in the price of cannabis (a 50% fall between 2015 and 2017), an event that has severely hurt many marijuana farmers in the state. If states are careful, however, strict regulations (including lower licensing fees for small-scale producers) can create a fair and sustainable market.
Fighting Big “Farm-a”
Appellations can also be a great way for cannabis producers to protect themselves. Appellations essentially certify that an identifier of geographic origin is genuine. This allows producers in a given area to be shielded from a market rife with inexpensive and unoriginal goods, although consumers get more diversity of choice.
There has also been proof that certain cannabis plants display traits that are unique to their environment. In California, for instance, the state senate passed a bill in 2017 that compelled California’s Food and Agriculture Department to devise a process that let licensed cultivators set standards for appellations that apply to marijuana grown in a specific region (not defined by county boundaries) by 2021.
There are estimated to be more than 68,000 marijuana growers in California alone, and several of these are represented by renowned advocacy organizations. Washington is one of many states where craft marijuana producers are now hoping to make their case for greater regulatory support.
Create a Unique Plan of Protection With MFE
Speak to the experienced professionals at MFE to learn more about which insurance options are the right choices for your business.
MFE is an Independent Insurance Agency with offices located in Los Angeles, Detroit and New York. They quote and place insurance through multiple carriers in order to ensure clients benefit from the most competitive prices possible. MFE is dedicated to helping businesses’ unique needs, whether they are small dispensaries or full-service operations. Their offerings include general liability insurance, product liability insurance, commercial automobile insurance, excess liability insurance, equipment breakdown insurance, cyber liability insurance, loss of income insurance and Employment Practices Liability Insurance (EPLI), which offers protection against employee discrimination claims.
Call MFE today at 213-266-7990 or contact them online to receive a quote or to learn more about their products.