How to Insure a Cannabis Business

Disclosure Statement: We receive a commission from affiliate links to Forbes Advisor. The Commission does not affect the views or opinions of our editors.

Marijuana is legal in some states in 38 states and DC Cannabis businesses such as dispensaries and cannabis farms face specific risks in the industry, such as theft, fire and justice. For example, a customer could claim that your product made them sick and sue your pharmacy.

You can think of cannabis business insurance as a small business insurance policy that includes many types of insurance to meet your business needs.

What is Cannabis Insurance?

Cannabis insurance is a small business insurance policies that specifically address the risks inherent in the production of cannabis. This includes problems such as workplace injuries, personal injuries and accidental property damage that happen to others, just like robbery and theft.

Who Needs Cannabis Insurance?

Here are some common types of small businesses that can benefit from cannabis insurance:

  • Cannabis growers
  • Cannabis delivery and transportation
  • Cannabis pharmacy
  • Cannabis sales
  • Wholesaler and distributor
  • hydroponic shop
  • Medical cannabis
  • Laboratory

What does Cannabis Business Insurance cover?

A good cannabis insurance policy has a mix of many types of small business insurance can cover your business from various problems. These include the cost of claims, theft and damage to your business’s property and claims.

A business policy (BOP) is a good place to start. The BOP combines the three main types of insurance and is usually cheaper than buying each type of insurance.

The BOP includes:

Business liability insurance

General liability insurance including property damage and accidental injury to others (not including your employees). It also covers your legal defense, judgment and settlement if you are sued as a result of an accident. For example, if a customer at your pharmacy slips on a wet floor and sprains their wrist, your general liability insurance may cover their expenses. medicine.

Commercial property insurance

If you own or lease commercial property for your cannabis business, commercial property insurance can help protect your home and its contents from physical damage due to events such as fire, storms, vandalism and theft. This includes things like your research, equipment, supplies, office furniture, computers, business documents and important documents.

Business accident insurance

If you need to temporarily close your cannabis business due to a problem covered by your policy, business interruption insurance replace lost income. This insurance is also known as “business income insurance” and covers issues such as fire, wind damage, loss due to damaged goods, loss of money income and the cost of moving to a new location temporarily.

Other Types of Small Business Insurance for a Cannabis Business

Cannabis farm insurance

Cannabis crop insurance can help protect your business from financial losses if your crops are damaged or destroyed as a result of a problem covered by your policy, such as bad weather, fire, theft and mistakes. employees.

Crop insurance covers your cannabis at all stages of growth from seed to mature and harvested plants that are processed and ready for sale.

Commercial vehicle insurance

If you or your employees use a vehicle for business purposes, such as transporting cannabis, equipment or supplies, you need commercial vehicle insurance. Your car insurance does not cover you for business use.

Here are some common types of commercial auto insurance:

  • Physical injury. This includes accidental injury to others by you or your employees.
  • Property damage liability. This includes accidental property damage caused to others by you or your employees.
  • Combined single limit (CSL). This includes one limitation for property damage and personal injury claims against you instead of two limitations.
  • Personal injury protection (PIP) and medical payments (MedPay). Both you and your passenger pay medical bills, regardless of who caused the car accident.
  • Collision insurance. It pays to repair or replace your work vehicle if it is damaged in a car accident.
  • Fully insured. Pays to repair or replace your work vehicle for problems such as theft, vandalism, fire, flood, hail, falling objects and collisions with animals .
  • Uninsured motorist/underinsured motorist (UM/UIM).. UM covers injuries to you and your passengers if you are hit by an uninsured driver. UIM covers injuries to you and your passengers if you are hit by someone who does not have enough auto insurance to cover your medical bills. In some states, you can purchase uninsured motorist property damage insurance to cover your vehicle from an uninsured motorist.

Equipment breakdown insurance

Equipment breakdown insurance can help pay to repair or replace your commercial equipment and machinery due to problems such as power outages, mechanical breakdowns, motor fires and power surges.

Product liability insurance

Product liability insurance including legal defense costs if a product you grow, sell, manufacture or distribute harms another person, even if your customer misuses the product.

For example, your liability insurance can help pay legal costs, including fines or settlements, if a customer buys or smokes more than the recommended amount of your cannabis product, which has harmful effects. and sue you.

Another example: Your product liability insurance may cover your legal costs if you’re sued because your product contains a pesticide that causes injury. to a customer.

surety bond

A settlement agreement may be required in your state to ensure that your cannabis business will operate in accordance with your state’s laws and regulations.

For example, in California the Office of Cannabis Control requires the annual license holder to have proof of a fixed deposit of at least $5,000 paid to the state of California. In Colorado, withholding tax must be equal to two months of your tax liability.

Wages of employees

Workers compensation insurance required in most states if your cannabis business has employees (even if it’s just one employee). Employers pay your employee’s lost wages, medical bills, disability benefits and other expenses (such as physical therapy) if they are injured or sick while performing work-related duties. .

What does Cannabis Business Insurance not cover?

There are many types of issues that cannabis business insurance may not cover. Here are some examples:

  • Risks associated with the illegal cultivation or sale of marijuana.
  • Losses caused by federal law. For example, if federal law raids your business and seizes your goods, you will not be reimbursed for your losses.
  • Damage caused by disease or corrosion. These risks are considered part of the risk of growing cannabis, so most insurance policies do not cover it.

Examples of Cannabis Insurance Claims

Here are some examples of claims and the type of cannabis insurance to use.

Common claims and cannabis insurance

What Kinds of Pharmacy Insurance Are Needed?

The type of cannabis insurance required for a medical facility varies depending on the laws in your state. Here’s a look at cannabis business insurance requirements by state.

State insurance requirements for cannabis libraries

What are the Risks of Running a Cannabis Business Without Insurance?

If certain types of insurance are required in your state, you may risk fines and penalties if you operate your cannabis business without insurance. For example, failure to meet insurance requirements in California can result in a fine, suspension or revocation of your license.

But it’s a good idea to consider more insurance than what your state requires (even if your state doesn’t have any). This is because you do not cover your cannabis business from other types of problems such as theft, fire, mechanical failure or the repair of your car after a car accident, which means that your business will financial loss.

How Much Does Business Insurance Cost for Pharmacies?

Of the business insurance rates for pharmacies will vary depending on many factors, including:

  • The minimum insurance required in your state
  • The scope and extent of your activity
  • Type of policy you need
  • Your insurance is limited
  • The number of cannabis licenses you have
  • Your experience in the cannabis industry
  • Any past claims you have made

Simple Business Insurance

Compare Insurance Quotes From Top Insurers at SimplyBusiness. Get a Policy in under 10 minutes.

How to get the best Cannabis Business Insurance?

The California Department of Insurance is announcing list of cannabis insurance companies. Although we do not endorse or recommend any of these companies, many of them are certified cannabis businesses in many states. This list can be a good place to start your search when looking for cannabis insurance.

Here are some tips to find the best cannabis business insurance in your state:

Gather your information and documents

Before you start shopping for cannabis business insurance, you need to gather some information about your business. It includes:

  • Your name and business address
  • A list of products you sell
  • Information about your employees
  • Your company’s financial statements
  • Information about any previous claims you have made

Having all of this information readily available will make the downloading process easier and will help you get better rates.

Get your business insurance together

A solid start to your cannabis business insurance is having a business policy (BOP). The BOP combines three main areas: general liability insurance, commercial property insurance and commercial casualty insurance. It is often cheaper to buy these policies together than to buy them separately.

You can add other types of insurance to your policy if needed, such as commercial auto insurance, property insurance and workers’ compensation insurance.

Compare business insurance quotes

One of the best ways to find competitive rates is to compare business insurance quotes from multiple insurers. Not all insurance companies offer coverage for cannabis-related businesses, so it’s important to shop around to find one that does. You can often get free quotes online or by speaking with an independent insurance agent.

Leave a Comment