The U.S. cannabis industry is growing at an unprecedented rate and is expected to be worth $57 billion by 2030. While this phenomenal success has benefited growers, suppliers, businesses, and the U.S. economy, it has also brought a slew of new hurdles to solve. For many, this means getting the right insurance coverage to protect their businesses against unforeseen circumstances.
The good news is that there’s a whole lineup of cannabis business insurance firms that provide coverage for growers, extractors, product experts, dispensary owners, and budtenders, as well as industry specializations, including bakers, consultants, laboratories, medical offices, and chefs.
What Is Cannabis Insurance?
Cannabis insurance is a policy that protects cannabis growers and merchants against particular risks such as third-party physical harm, equipment protection, product recalls, and general liability.
When competing in a fast-growing market such as this, minimizing risks that might interrupt your business operations is critical. Our insurance experts can help you do that.
Who Should Get Cannabis Insurance?
Cannabis-related businesses (CRBs) confront several risks and challenges. CRBs are subject to the same general liability and other hazards as agricultural and industrial companies. This includes workplace accidents, property damage, and crop failure.
CRBs are particularly vulnerable to fires from both external and internal causes. Theft, general, and product liability are some of the other most serious hazards. Due to federal rules, companies operating within state jurisdiction suffer severe financial constraints. As a result, around 70% of CRBs are cash-only businesses with no official affiliation with a bank. So, they often end up handling huge quantities of cash, increasing the risks of theft and embezzlement.
To protect themselves against possible litigation related to any of the aforementioned risks, all licensed enterprises in the local cannabis market must have insurance. This includes:
- Growers and producers
- Manufacturers of cannabis and cannabis-related products
- Cannabis advisors
- Owners of medical dispensaries and general stores
- Micro and artisanal growers
- Wholesalers and distributors
- Producers and processors
- Manufacturers of hemp products
Every cannabis-related business is unique, and your coverage needs may differ. Work with our certified broker team to develop a policy tailored to your cannabis company insurance requirements.
What Does Cannabis Insurance Cover?
You get a variety of plans to choose from, including:
- Insurance for Commercial General Liability (CGL): CGL, also known as slip-and-fall insurance, protects your business from risks associated with everyday operations, including third-party personal injury or property damage claims. CGL often includes product liability insurance, which is critical for cannabis companies since it protects against any third-party lawsuit or accusation relating to the products you produce, manufacture, distribute, or sell.
- Commercial Property Insurance: If you own a cannabis-related retail store or have a space where your business works out of such as an office or warehouse, it’s important to safeguard the building and its contents. Business property insurance is intended to cover it if you sustain damage or loss due to extreme weather, a natural catastrophe, fire, theft, or vandalism.
Commercial property insurance may also cover the following:
- Stock Inventory Coverage: This type of policy financially protects seedlings, plants, and completed goods (for indoor cultivation operations). While business interruption insurance does not offer financial support during pandemics, infectious illnesses, or government-mandated public health closures, it does pay any net revenue lost due to an insured disaster, such as a fire or flood. It covers your overhead running costs, commercial property rent or lease payments, and missed earnings for your employees when your firm is closed.
- Equipment Breakdown Insurance: You must cover the machinery and equipment you utilize as a cultivator, grower, or producer. Equipment breakdown insurance provides precisely that: it covers the expense of repairing or replacing your equipment if it has a mechanical or electrical breakdown.
- Errors and Omissions (E&O) Insurance: Professional or medical cannabis consultants should this policy to safeguard your business against allegations of carelessness, product failures, and media activities. This is important if your business is sued for defamation, libel, or slander. Assume you fail to perform a promised service or are accused of misbehavior. In such instances, E&O insurance is intended to cover your legal defense costs and any court-ordered settlement.
How Much Does It Cost To Get Insurance?
The cost of cannabis insurance varies significantly across insurance providers. When computing your premium, insurers evaluate various criteria, including:
- Education and experience
- Legal certification and all necessary licenses
- The coverage limits that you need
- The goods and services you offer
- Number of employees
- Years in business
- Your yearly and forecasted earnings
- The claims history of your company
The amount of cannabis insurance your business needs is determined by the size of the operation you run and the risks you face. Also, your jurisdiction may mandate you to carry a certain level of coverage as a legal cannabis business.
Speak with an MFE Insurance certified broker to evaluate what and how much coverage you need based on your location, limit your liability risks, and guarantee no gaps in your policy that leave you vulnerable to a third-party lawsuit.