In recent years, the legalization of cannabis was an attempt to reduce criminal involvement with the sale of cannabis and to stop the selling of cannabis to minors. Now, the selling of cannabis in stores is a government-regulated and legalized industry. There are now more than 400 brick-and-mortar cannabis stores established. Because the legalization of this industry is so recent, most cannabis retailers are new businesses and may not have the proper cannabis retailer insurance in place.
Though it may seem that insurance is only something that larger businesses need, small and up and coming businesses and storefronts may need it even more. For a business that is just starting out (those within the first 1-3 years), unforeseen events that lead to lawsuits, medical expenses, or extensive repair costs can drain the resources of the business quickly, easily, and in some cases, completely.
If you are a licensed cannabis retailer or you’re planning to open a recreational cannabis store and want to know what insurance coverage you need, you’re in the right place. In this article, we will talk all about cannabis retailer insurance and the various risks that it can protect your business from.
Let’s get started!
1. The Risk of Property Damage & Theft
Any business that stores physical products and has a physical location is exposed to the risk of damage to its property or properties. Damage can be brought about by natural disasters, robbery, or vandalism. When significant damage is sustained, it can lead to costly repairs.
This is where commercial property insurance comes in. Generally, these policies cover any damage or sustained losses to the physical business or office space. It covers the building or space, regardless if it is owned or leased - as well as the equipment, company documents, inventory, employee’s personal belongings, and business interruptions as a result of the damage.
2. The Risk of Stock Spoilage
If a batch of your cannabis products undergoes spoilage, it can cost your business a lot. This is why adequate cannabis liability insurance should have spoilage coverage.
Spoilage coverage is usually nestled under commercial property insurance and it provides coverage for the loss of perishable stock that is stored at the premises of the property.
3. The Risk of Business Interruption
There are a number of reasons why business interruptions can take place for your cannabis store. It can be because of a natural disaster, customers avoiding areas they consider unsafe, and orders of civil authority.
The business interruption coverage is usually included under commercial property insurance and it covers the loss of revenue caused by the cessation of operations due to the above causes.
4. The Risk of Injuries Because Of Your Product
Cannabis retailers can sell a wide array of products - including various strains of cannabis and the accessories involved in using the drug. If your customer is harmed in any way because of the use of such products, they may file lawsuits at your business. Even if you are a retailer and not the actual manufacturer of such products, your business can still be liable.
This is where product liability coverage comes in. Product liability coverage is usually nestled under the general liability insurance policy and covers your business in the event that lawsuits are filed because of sustained injury from using the product - whether it’s because of production flaws, design defects, or marketing errors.
5. The Risk of On-Site Third-Party Accidents
Having a physical location comes with yet another risk: the risk of a third-party (e.g. a customer) sustaining an injury within the premises. This can lead to lawsuits and medical expenses. The coverage for third-party injuries is included in the general liability insurance.
6. The Risk of Employee Injury
If ever an employee is injured in any way while on the job, the employer can be held liable. Therefore, most businesses secure the worker’s compensation insurance as a way to protect their employees and ensure that the medical costs are covered and the injured employee is given adequate compensation.
7. The Risk of Reputational Damage
All kinds of businesses face the risk of reputational damage. This can be due to libel, slander, or copyright infringement.
A coverage for reputational damage, which is usually under the general liability insurance policy, covers the company’s loss of profits and gives the necessary financial support for crisis management and recovering from reputational damage.
How Cannabis Retailer Insurance Addresses These Risks
Cannabis liability insurance aka cannabis retailer insurance pertains to a customized insurance policy that is designed to protect a cannabis store from all of the above risks - or at least the ones selected by the policy owner. It can combine the general liability insurance, commercial property insurance, and worker’s compensation insurance in one, easy-to-manage policy.
The right cannabis liability insurance should be tailor-fit for the needs of your business and will include all the policies and coverages that you need so that your business can survive unforeseen incidents like lawsuits, property damage, accidents, and so on.
Where Can I Get Cannabis Retailer Insurance?
As one of the top providers of business insurance in Canada, we at KASE Insurance put our customers at the center of everything we do. We work closely with business owners and assess the business’s top risks to make the best recommendations for your customized insurance policies. With this approach, we have gathered awards and industry recognition through our years of service - as well as the trust of our clients. With KASE Insurance, you can be sure that you are in good hands!