Finding the right insurance policy for cannabis cultivators is imperative to ensure compliance with state laws and ensure ideal business practices. The laws can be confusing with many grey areas since, on a federal level, cannabis is still considered illegal. Insurance is one requirement that many states have been adopting to ensure a business is operating ideally.
When it’s not a requirement, many cannabis business owners are hesitant to get insurance. These reasons may vary from finding it difficult to find an insurer, the belief it is not worth the cost, to fear that the information shared with insurance companies could be accessed by federal authorities. But as the cannabis industry grows from the $17.7 billion dollars that it was valued at last year, the need for property insurance options will too.
Reasons Cannabis Cultivators Need Property Insurance
Cannabis cultivators, dispensaries, and laboratories need to ensure the security of their property. They do this by keeping security cameras, installing safes, and other measures to deter some of these risks. But when an event happens which causes harm to the property, the damage is done. The only resort to protect a cannabis business owner from the financial losses of damaged property is to have obtained a property insurance policy beforehand.
Property insurance is a policy that covers property damage (business-related) that happens at a grow operation or dispensary. This coverage helps with repairs or replacement costs to covered property types. Here is more below about the common types of property that are insured with a cannabis property insurance policy.
Risk Of Theft & Vandalism
Numerous reports of cannabis businesses being victims of theft and property damage have been in the news recently. Property insurance can cover a cannabis business for common types of property including the contents, fixtures, improvements, inventory, computers, and related hardware and the building itself. Being shielded from incidents that cause the loss of these expensive items can ensure that your operation gets back on its feet.
It’s also important to follow certain steps after an unfortunate event to make this process easier and get reimbursed. These steps include:
- Immediately file a police report and report losses to the cannabis regulatory authority in your area.
- Contact your insurance provider and start a claim. A claim number will be provided once your claim has been filed. A claimed adjuster will be assigned to your case.
- Continue protecting your business the best that you can after the loss.
- Take photos, review video surveillance, and document everything possible to provide to your insurance company if necessary.
- Consult your insurance professional and review your policy to ensure that all your bases are covered.
Fire Damage To Premises
Cannabis cultivators particularly those who operate in states like California have seen firsthand the damage that wildfires can cause. Last year, wildfires blazed all across the state from San Diego up to San Francisco. Buildings of all types burned down and forced people to evacuate.
There was a recent case of a cannabis grower in Carpinteria, California who’s crops were destroyed as a result of the ashes from a wildfire. Thousands of plants were damaged as tiny ash particles reigned down into the greenhouses. Lead, asbestos, arsenic, and magnesium were among the contaminants found in the cannabis that was damaged by the ash. Fortunately, that grower had an insurance policy that covered these damages.
Product Flooding
A natural disaster such as flooding can cause a lot of damage to a cultivation operation. It can damage inventory, the structure, and other property that’s found within the operation. Nearly a third of the United States this year has had flood risk potential. It is not easy to predict whether a flood will occur, but it’s a risk that can be managed by obtaining insurance coverage.
Water Damage
Equipment that’s used to run a cultivation operation is expensive and necessary to run successfully. But things break down or stop working properly at times. For example, let’s say the cultivator breaks a pipe on the hydroponic system while it is working in your operation. Inside of watering all the plants, the system causes water damage to other equipment on your property. A property insurance policy can help replace or repair the system and other items that were damaged.
Damage To Hardware
Computers, security systems, and other expensive hardware are intended to help keep your business safe and store important information about your cannabis business. When these things are damaged, you have one thing less to worry about when you have property insurance to replace them. Your focus can be on getting your business back up and running instead.
Speak To An Experienced Cannabis Insurance Agency
As an entrepreneurial cannabis business owner, we understand your challenges with finding an insurance policy that meets your needs. MFE is an insurance broker who works with many insurance companies to provide coverage for the cannabis industry. We’re here to get you the right policy for your business. Contact us today to get started.