Cannabis businesses often face significant challenges in securing insurance for their companies. Due to marijuana products still being illegal on the federal level and the high risks associated with storing and transporting cannabis, many insurers do not deem such businesses as acceptable candidates for coverage.
However, weed businesses that choose to transport their product without cannabis insurance are exposing themselves to potentially catastrophic financial risks that may be severe enough to destroy their business’ stability.
Although acquiring cannabis insurance may be difficult, dispensaries must dedicate time to this effort. To understand why, the following provides a general overview of the risks a dispensary faces when uninsured and how it can improve its chances of securing coverage.
The Risks of Transporting Cannabis
Cannabis is a valuable product, with a single pound worth four digits on average. To transport this product, dispensaries must understand that there are three primary risks they will face as long as the cannabis is in transit.
The Cash
Dispensaries have difficulty securing insurance coverage and often face challenges working with banks. This contributes to the industry-wide focus on cash instead of credit and debit. Many drivers who transport cannabis products for a dispensary will be carrying larger-than-average amounts of cash, which makes them a prime target for theft, bodily harm, and other dangerous incidents. In some cases, drivers may carry well into the five figures on their person.
The Product
In addition to the cash challenges that cannabis transportation poses, the product itself is perhaps the greatest liability. Cannabis is especially prone to theft, and vehicle break-ins are not uncommon. Because the product is so appealing as a target for thieves, many insurers will not help with cargo protection.
Unpredictables
The third and less commonly considered element of cannabis transportation risk is the unpredictability of the task. From accidentally driving over federal land (where cannabis transportation is illegal) to facing severe road conditions during adverse weather, there are plenty of other setbacks an otherwise smooth transport could encounter. Each of these threatens the business, from loss or damage to cargo to fines and penalties that cost additional money to resolve.
How to Increase Insurability
While securing cannabis insurance for transportation may be challenging, it is not impossible. Dispensaries seeking strong coverage can take proactive steps to make themselves more insurable, many of which have the added benefit of potentially decreasing the premiums they will pay later.
An Armored Car
Many insurers require cannabis businesses to transport their goods in an armored car to protect the product inside. Having one will increase the chances of being insurable, though each provider is different and may have other requirements.
An Incognito Car
Some insurers will accept cannabis companies that use hidden vehicles that are indistinguishable from others on the road as an alternative to an armored car. An insurance agency may sometimes require both an armored incognito and a concealed vehicle.
A Regulatory System
Insurers want to see the course a cannabis product takes from beginning to end. This way, they can corroborate events if something should go wrong. Seed-to-sale regulatory systems provide options such as barcodes that trace the product step by step to its destination.
Secured Lockbox
Many insurers require that the driver secure anything valuable inside a lockbox in the vehicle transporting goods, cash, or both. Proving that your business uses lockboxes responsibly can decrease the company’s risk profile, leading to an increased chance of insurability.
GPS Tracking
Alongside a tracking system for the cannabis product’s transport, insurers often want to see GPS tracking on the vehicle itself. This helps further support any claims made to create the most complete picture of an incident for which the insured seeks coverage. GPS tracking can also assist with police reports, further bolstering an insurance claim.
Get Cannabis Business Insurance to Protect Your Product on the Road
Cannabis businesses are facing numerous challenges in the constantly evolving outlook of state legalization alongside federal prohibition. This can make securing strong insurance coverage challenging, which is why working with industry professionals is non-negotiable.
The team at MFE Insurance is experienced in insuring cannabis businesses to address their most salient risks, from store break-ins to cargo loss during transport. Contact MFE Insurance today to speak to a professional and create a customized blend of insurance coverage to keep your budding business financially protected as you grow.