Chances are when you think of the Cannabis industry your first thought is not insurance. Although insurance is not as sexy as that frosty nugget you can hold in your hand or as interesting as the ins and outs of growing, it does play a crucial role in the cannabis industry. We all know that Cannabis is now legal in New York and with that comes the excitement of the legal market. Whether your business is focused on the medical or recreational sale of cannabis, you will face both challenges and opportunities. The success of your business will rest largely on the decisions you make in the early stages. Many cannabis businesses face substantial risks daily, so having a comprehensive insurance program with a trusted partner is imperative.
The type of insurance coverage available will depend on what aspect of the Cannabis world you are entering. Coverages can vary depending on whether you are a third-party testing facility, grower, dispensary owner, and so on. For this article, we will discuss the top three most common coverages that cannabis businesses should consider.
General liability insurance typically covers you and your company for claims involving bodily injuries and property damage resulting from your products, services, or operations. It may also be referred to as “slip and fall” insurance. In addition, it helps pay for legal defense in the event your company is sued. Let’s be honest, we live in a litigious society so it’s important to have limits that are going to cover you if you are ever taken to court. For example, imagine that you’re lucky enough to receive a license to open a retail cannabis store. It’s opening day and people are lined up because they are looking for the best bud in town. While people are coming and going from the store someone slips and BOOM just like that, they break their leg and have serious back injuries. If you don’t have the right liability limits in place, then all that money you invested to get your shop up and running could end up going towards legal fees and medical expenses for the injured party.
The second most common coverage you should look for is Products and Completed Operations coverage, which falls under General Liability. Products and Completed Operations is a form of insurance coverage that protects you from customer lawsuits alleging property damage or bodily injury due to your product or completed service. Let’s say you are a third-party testing facility and you just recently certified that a batch of cannabis flower contained no harmful substances. Well somehow your instruments were not calibrated properly or a step in your process was missed, and you didn’t catch residual pesticides that were present in the flower. A customer gets his hands on this bad flower, smokes it, and ends up in the hospital. You can pretty much guarantee that there will be a lawsuit and that your testing facility will be named. Again, without the right coverage in place, you will be selling all that shiny testing equipment in order to pay legal fees and medical expenses.
Lastly, there is Workers Compensation insurance. This is a type of coverage that’s required by New York State that provides your employees with coverage of medical expenses and lost wages if they get hurt on the job. Your employees are your lifeblood, so it’s important to take care of them and to make sure they get covered in the event of an accident or injury on the job.
So, before I wrap this article up, I want to stress how important it is to have the right coverage for your Cannabis business. You can see that without it you are leaving your business exposed and could potentially watch your business go up in smoke. It really boils down to having an agent that knows the industry and has your best interest in mind. With that said please check out JD Chapman for your Cannabis insurance needs.