While cannabis companies are becoming more commonplace in today’s society, there continue to be some serious business risks involved. Marijuana laws are changing at a rapid rate but the drug is still not legal in all 50 states. As no two states’ regulations are exactly alike, it can be challenging for cannabis companies to manufacture and distribute their products without having to jump over a multitude of hurdles.
In addition, federal laws prevent legal cannabis retailers from transporting their products over state lines. Marketing restrictions are also tight, making it difficult for new cannabis companies to launch widespread campaigns without facing infractions or violations.
The Need For Cannabis Insurance
While all businesses face certain risks when producing or selling goods, companies in the cannabis industry experience a higher-than-normal level of risk. Confusion about health risks can result in liability issues. Unlike companies that sell alcohol who are protected under the “assumed risk” category, the health risks of cannabis are not as known causing cannabis companies to be at risk for product liability claims. There are also no clear guidelines on how to warn customers of said risks. While the federal government provided cigarette manufacturers with established guidelines on how to warn customers about health risks, there are no set guidelines for cannabis companies.
A Look At Cannabis Insurance Policies
Acquiring insurance for your cannabis company is an essential undertaking for business owners who understand the unique risks and exposures of this industry. Whether your company is involved in the growing of cannabis, you operate a dispensary, or have some other participation in the business, you need adequate insurance coverage to protect your company against costly lawsuits. Here is a look at some of the most important cannabis insurance policies that are detrimental to all cannabis businesses.
Product Liability Insurance
While cannabis companies face a number of serious risks, product liability claims are one of the most substantial. As the effects of cannabis use is still not widely understood, there continue to be cases of personal injury caused by consumers who use the product and experience adverse side effects. For example, a customer could overindulge in edibles containing THC resulting in a ‘bad reaction’ or an injury when the intoxicated person falls or gets into an accident. Product liability insurance helps protect businesses from the possible fallout that could occur in the event that their product causes an injury or other damage to a third party.
Equipment Breakdown Insurance
What would you do if your business’s point-of-sale equipment, such as your electronic cash register or credit card reader, shorted out following a power surge? Would you have the cash available to replace the machines? These types of situations can occur at any time and if you do not have the money or insurance to cover the damage, you could wind up having to close down shop unexpectedly. Equipment breakdown insurance provides protection for your cannabis stock and property in the event of a malfunction, power surge, user error, or similar incidents. Coverage can typically be used for the cost to repair or replace the damaged equipment and stock, as well as for time and labor.
Cash is a primary method of exchange within the cannabis industry. Due to the higher level of risk associated with this method of payment, having crime or theft coverage is a wise option to reduce certain risks. Crime insurance provides coverage for loss of money, assets, or securities that result from acts like employee theft, fraud by third parties, social engineering, or theft of property from the premises. It is important to note that crime insurance is generally not covered by commercial property insurance.
Commercial property insurance provides business owners with protection against risks associated with their place of business. From fire damage and theft to floods and earthquakes, having the proper coverage can help ensure that you do not face financial ruin in the event of severe property damage. For example, if your area experienced a tornado that affected the structure of your cannabis dispensary, you may be responsible for the repair or replacement of materials, as well as the cost of labor to hire contractors to make the repairs. With property insurance, you are covered for these expenses.
Speak To A Cannabis Insurance Broker Today
If you operate a cannabis company or are considering starting a business in the industry, having the right insurance policies is a must. Cannabis insurance does more than just provide financial protection in the event of an accident or incident. It can also provide business owners with peace of mind as they continue to grow their company over time. To learn more about the various types of cannabis insurance policies available or to see how you can acquire these cannabis insurance policies, contact the cannabis insurance brokers at MFE Insurance today.