Cannabis businesses are still relatively new to the commercial arena, and legalization changes have made flexibility and adaptability mandatory for success. While most owners’ efforts are focused on establishing a strong business presence, selecting appropriate inventory, and hiring knowledgeable budtenders, it is essential not to overlook the value of insurance for a cannabis business.
This goes beyond the basics of general liability; a smart insurance plan should also include protection for the company’s machinery. Different types of cannabis businesses rely on a variety of machines depending on where they are in the sales process.
Laboratory tools, extraction systems, pre-roll machines, and more may be essential to your daily business operations. No matter the equipment, insuring your machinery is non-negotiable for successful cannabis companies that want to secure their financial future.
Here’s why.
The Risk of Equipment Breakdown
One of the most salient risks for cannabis business machinery is breakdown or failure. If an expensive processor or other tool fails, it could cost thousands or even tens of thousands of dollars to fix or replace it. Finding a comparable model might not be possible, or the replacement parts may be on backorder.
Equipment insurance can protect a cannabis business from the financial difficulties of equipment failure. It can assist with the bills for buying and shipping replacement parts and the labor cost for a professional to make the repairs. If the product must be replaced entirely, it may cover either the same model or an equivalent.
The Potential for Theft
Equipment can have more problems than just failure. Because weed businesses are often relegated to cash-only operations, they are also a prime target for theft. Once someone breaks into a store or other facility, they have free access to anything they want to take; machinery is one of the most lucrative options.
If a piece of equipment is stolen, equipment insurance can help to pay for the replacement expense. Still, additional property insurance is also smart to assist with the costs related to the break-in itself: broken glass, damaged doors, and more.
Less Tangible Consequences
Missing or damaged equipment can be costly, not just because of the impact of replacement or repair on business finances. Many other consequences of machinery damage or theft may not be immediately apparent.
Regulatory Non-compliance
When stolen or damaged, certain types of equipment may cause cannabis businesses to fall short of regulatory compliance standards. For example, if a thief has stolen or destroyed the business’s video surveillance cameras, the company may no longer comply with its jurisdiction’s minimum mandatory security regulations.
Continuing to do business while these issues remain can lead to fines, legal penalties, and even shutdowns. Insurance can help to cover the costs of essential repairs such as these to keep the business on track.
Business Interruption
Equipment problems can entirely halt a company’s forward momentum. A broken bench scale could leave your dispensary unable to sell anything that needs to be weighed, such as flower. This can cause a significant drop in revenue and negatively impact customers who might establish a positive relationship with another dispensary.
The faster any business interruption can be remedied with the financial help of insurance, the less damage an equipment breakdown or theft can do.
Employee Injury
Many equipment insurance policies do not include strong coverage for the employees who use the equipment. This is why securing additional workers’ compensation insurance is invaluable. Business owners may assume that equipment insurance will cover anything related to equipment malfunction, but that is not necessarily true.
Workers’ compensation can cover medical treatment costs for employees injured due to equipment issues. If a solventless CO2 extraction machine overheats and burns someone, or if a sharp edge of a broken scale causes a laceration, those individuals should be able to rely on medical financial support from the company. This does not need to come from the business’s savings when insurance can help.
Insure Your Cannabis Machinery Before Problems Arise
When operating a cannabis business, from growing to final sale, equipment insurance for your machinery is essential for success. Contact MFE Insurance today to get a customized insurance recommendation that adequately covers your business’s exclusive equipment needs and keeps you in compliance with regulatory guidelines.