In October 2018, the recreational use of cannabis became legalized in Canada. Currently, the Canadian cannabis industry is worth around $2.6 billion with over 1,000 retail stores across the country. As a relatively new market, these kinds of businesses are at risk for a number of possible liabilities.
A small physical amount of cannabis inventory has a high value, and this fact alone is an added risk in case of fires, theft, and other natural disasters. Additionally, because cannabis products can have potential side effects, this exposes any cannabis retailer to the risk of a product liability lawsuit.
Keep reading along as this guide will discuss 6 things every cannabis business owner wants to know when it comes to cannabis liability insurance.
1. What is Cannabis Insurance and Why Is It Important?
To put it simply, cannabis insurance is a specialized type of insurance meant for cannabis businesses, encompassing producers and retailers alike. This type of insurance is a necessity for cannabis businesses for a number of reasons.
For one thing, most businesses do not have the means to be set back by lawsuits, property damage, or inventory loss. Cannabis insurance can provide protection for all of these issues.
Another factor to consider is how competitive this rapidly growing industry is. This means most businesses will suffer immense loss from just a few days of business interruption. The right cannabis insurance, put together by a cannabis insurance expert, can help mitigate losses from business interruption as well.
2. Is Cannabis Insurance and Cannabis Liability Insurance The Same Thing?
Cannabis liability insurance technically refers to commercial general liability that is specialized for cannabis businesses. However, this is not the only type of insurance that a cannabis business can have. A complete cannabis insurance plan can be a bundle of various other insurance types that align with the needs of the cannabis business.
3. What Does Cannabis Liability Insurance Cover?
Cannabis liability insurance provides coverage mainly for third-party injuries or illnesses associated with your business. This type of insurance is crucial because as a cannabis business, you sell or provide ingestible or consumable products that have palpable effects on human physiology.
Products such as dried cannabis, cannabis oil, edibles, and so on can cause side effects such as the following:
- Headache, dizziness, drowsiness
- Paranoid feelings and impaired mental functioning
- Tachycardia and elevated blood pressure
The above side effects can happen even with pure, uncontaminated products and the extent of these effects vary from person to person. The biggest risk is if these side effects compound another condition that the customer already has.
Another risk is to inadvertently sell cannabis products that are contaminated with pathogens such as E. coli, Salmonella, and Clostridium. If a customer gets ill from these contaminants and it is proven that the pathogens are from cannabis products from your store, it could lead to a viable lawsuit.
Injuries Within Premises & Advertising/Reputational Injuries
As you’ve seen so far, there is plenty of emphasis on product liability when it comes to cannabis liability insurance. However, cannabis liability insurance also extends to injuries sustained within your business premises. This type of insurance can cover reputational or advertising injuries such as libel, slander, invasion of privacy, copyright infringements, and more.
For all of the mentioned scenarios in this section, cannabis liability insurance covers the medical and/or legal fees involved.
4. What Can Be Included In a Cannabis Insurance Bundle?
In terms of managing risks for your business, cannabis liability insurance already covers a lot of bases. But when you incorporate this kind of insurance into an insurance bundle called cannabis insurance, you get financial protection from additional risks, such as the following:
- Property damage due to fire, theft, vandalism, and other covered perils
- Business interruption due to property damage or inaccessibility
- Accidents relating to commercial vehicles
- Inventory loss or theft
- Employee dishonesty
Commercial Property Insurance
All points in the above list fall under commercial property insurance which is vital for many cannabis businesses as many of them have a physical location that is vital for storing and selling valuable goods.
Commercial property insurance provides financial protection by covering the costs of property repairs, business interruption, and stolen/damaged inventory.
Crime Insurance and Cyber Insurance
As for financial protection from employee dishonesty and cyber attacks, these are two separate types of insurance, namely crime insurance and cyber insurance.
Cannabis products typically have a high value, making them tempting commodities to steal. Though external theft is covered by the previously discussed commercial property insurance, employee theft isn’t covered. This coverage would be a separate insurance add-on (i.e. crime insurance). Crime insurance also covers other forms of employee theft and fraudulent activities.
As for cyber insurance, this has extensive coverage that can help your business recover faster from data breaches, ransomware, and other forms of cyberattacks.
Commercial Auto Insurance
If your cannabis business has a fleet of cars or trucks that you use to deliver goods, transport goods, and other business functions, then you need this type of insurance.
Commercial auto insurance will cover medical/repair/replacement costs in case your vehicle gets involved in an accident, gets stolen, or gets vandalized.
5. What Kind of Businesses Need Cannabis Insurance?
Any business involved with the production or selling of cannabis products can benefit from cannabis insurance. These businesses can be involved at any stage of the cannabis supply chain; here are some examples:
- Cultivators or suppliers
- Processors or manufacturers
- Cannabis dispensaries
All of the above types of cannabis businesses face their own risks. Here at KASE Insurance, cannabis insurance can be tailor-fit based on the unique needs of your business so that you have the exemplary coverage that you need.
6. How Much is Cannabis Insurance?
The price of cannabis business insurance can vary depending on what scope of insurance coverage you need, the size of your business, your location, and various other factors. However, dispensary insurance cost can typically start from around $67 per month.
Protect Your Business with Personalized Cannabis Insurance
In this guide, we talked all about cannabis insurance. As we’ve discussed, the core of this insurance type is cannabis liability insurance. However, you can also get your inventory insured, your commercial property and vehicles, and more.
At KASE Insurance, we can personalize your cannabis insurance so that it fully aligns with the needs of your business. We provide assistance for your entire business insurance journey, from premium negotiations to following up on claims. You can be sure that you are always in good hands.