When thinking about how you’ll get your cannabis business off the ground, you might think about how you’ll secure and manage inventory or what licenses you’ll need – but many newly minted cannabis business owners neglect to remember the importance of insurance. The cannabis industry is complex and ever-changing, but no matter where the industry is headed, insurance is a must for your cannabis business.

The 5 Types of Coverage You Need

Many cannabis business owners are surprised to learn that they need to cover their business in many of the same ways that traditional businesses do. These types of coverages depend on the type of cannabis business you are running, but a general rule is to always have:

  1. Property Insurance for buildings, contents, equipment, inventory, business income, etc
  2. Liability Insurance for both Premise Liability as well as Products-Completed Operations
  3. Automobile/Transportation Insurance for company automobiles and cargo being transported
  4. Workers Compensation Insurance to protect owners and employees in case of an injury on the job
  5. Employee Benefits to protect the company

Tips for Securing Insurance

Trust Comes First: Selecting an Agent You Trust

 When it comes to securing insurance for your cannabis business, you need to work with an insurance agent you can trust. Building a strong relationship with your insurance agent can help the insurance process move more smoothly and increase your confidence in them over time. 

Working with an agent who has experience in the industry and knowledge of the complexities that come along with the cannabis sector can provide you with peace of mind that your business insurance is in good hands. They will be able to provide you with information about what your individual state requires, like bonds and state requirement letters, to ensure that you’re compliant at every step. 

Be cautious when selecting your representative and policy. Property limit requirements may be an issue with some cannabis insurance carriers who can only provide property coverages with total insured values of $3 million or less.

Rock Your Region: Learn Your State’s Unique Requirements

Similar to compliance, specific insurance requirements for cannabis businesses may vary from state to state. For example, in Massachusetts, cannabis businesses are  required to “obtain and maintain general liability insurance coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually, and product liability insurance coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually.” 

Compare this to Washington, where the state mandates not only the type and amount of coverage but other contractual elements as well. Requiring licensees to “at all times carry and maintain commercial general liability insurance or commercial umbrella insurance for bodily injury and property damage arising out of licensed activities.” 

When you begin working with your insurance agent, be sure to discuss the specific requirements of your state. The things to keep an eye out for and to ask about include:

  • Most states have security requirements that may differ from the insurance carrier’s security requirements, for example, cannabis insurance carriers typically require a 24/7 camera system, monitored burglar alarm & monitored fire alarm etc.
  • Most cannabis insurance carriers have difficulties ensuring cannabis companies that have residential exposures and/or are in high wildfire zones.
  • Most State Cannabis License requirements are typically the same for both dispensary and cultivation operations, however, there can be important differences to note.
  • A number of non-plant touching companies are considered a part of the “cannabis industry”, for example, delivery companies, component manufacturing companies, landlords etc.

Consider What’s to Come

With any business, you need to consider what lies ahead. However, for cannabis business owners, the uncertainty of the future is heightened by the frequent changes that happen within the industry. As your business evolves alongside the industry at large, consider new threats that you may want to protect your business from. 

Take cybersecurity, for example, as cyber threats have become more and more of a pressing issue for businesses, many cannabis businesses are prioritizing insurance in that area. Keeping your eyes focused ahead can help your business stay on track and better prepare for any challenges that you might face. 

Insurance is a must for your cannabis business, but more importantly, it’s a safeguard that can protect your investment as a business owner. To learn more about cannabis compliance in your region, contact us today for a free demo and to learn more about how Pro Canna can help safeguard your cannabis business. For concerns and questions regarding your cannabis business insurance needs, please contact Jake Kaplan at Jake.kaplan@nfp.com.