In a relatively new, up and coming industry, characterized by tremendous growth potential but also its fair share of liabilities, cannabis insurance matters for the obvious reasons. Particularly in a space where risk is so prevalent, reliable insurance allows companies to remain resilient in the face of uncertainty. In this blog post, we’ll look at how a good cannabis insurance plan can help you protect your assets against loss and damages, as well as a few relevant, real-world instances of risk factors and how the safety net of insurance can help you navigate them.
Consider the case of a grower in Colorado, who suffers significant damage as a result of a natural disaster. While the loss is likely to be devastating no matter what, the ability to recoup on damages comes down to being adequately insured, ensuring that they receive the coverage they need to rebuild and bounce back.
What Makes Cannabis Insurance Crucial?
With adequate cannabis insurance coverage, you ensure your basic assets are protected and covered. But insurance also encompasses product liability, worker’s comp, and cyber threats, as risk factors that fall under the broad umbrella of good insurance coverage. In this respect good cannabis insurance acts as a safety net, ensuring your business can handle the full range of unforeseen circumstances with minimal disruption. As an example, take a California edible manufacturer who is facing a lawsuit after a consumer claims an adverse reaction to their gummies. Again, given the right insurance safeguards, they’re in a position to address the legal concerns without putting the larger operation at risk.
5 Steps to Cannabis Insurance Coverage
- Identify Your Specific Needs: Not all cannabis operations incur the same kinds of risk. A retailer's needs differ from the needs of a cultivator, say, or a product manufacturer. Start at the outset by assessing your business model and the potential threats it faces.
For example, a cannabis delivery service might prioritize insuring their vehicles and drivers, while a cultivation facility may focus more on crop insurance.
- Research Providers Specializing in Cannabis: Due to the unique risks of the cannabis industry, not all insurance providers offer cannabis insurance. It's crucial to find a provider familiar with the industry's nuances, who offers coverage tailored to your specific needs. A vape pen manufacturer, for instance, may not be offered the necessary coverage under a general insurance provider. A specialized cannabis insurance provider, however, can offer the customizations suitable to their needs.
- Evaluate Coverage Limits and Deductibles: As a general rule, ensure your coverage matches the value of what you're insuring. You don't want to be underinsured, of course, but you also don't want to overpay for a plan beyond the scope of your needs. A cannabis retail store located in a busy downtown district may opt for a higher coverage limit due to higher foot traffic and the associated risks, whereas a store set in a quiet rural area might opt into a cheaper, more limited coverage plan.
- Be up to Date on Regulations: Because cannabis regulations can and do change, so should your insurance. Regularly review your policies under the expectation that some clauses may go out of date or need adjustment. With legalization on the docket in many states, forward-looking distributors will be on the lookout for the opportunity to expand operations, and thus, seek coverage to cover inter-state transport.
- Reassess Annually: As your business grows and changes, your insurance needs might too. Schedule annual reviews to ensure your coverage remains adequate.
Securing Your Business's Future
While navigating the complex world of cannabis, cannabis risk management and cannabis insurance might seem daunting, think of it as an investment in your business's future. In the way that companies opt into automation for the sake of ensuring compliance, insurance represents another kind of long-term investment in the safety of your company, taking steps to proactively protect against even unforeseen or unlikely outcomes. By putting the right protections in place, you're not just safeguarding assets–you’re ensuring continuity throughout periods of high risk. Cannabis insurance is also an investment in a more literal sense. For investors considering the cannabis space, adequate insurance represents one facet of a credible profile for a company they might fund.
Your Next Step to Comprehensive Protection and Streamlined Automation
Understanding the importance of cannabis insurance and risk management is only half the battle. The next step is action. Ensure a resilient future for your business by securing the insurance that's right for you, as well as the general software that can help you stay ahead of the curve, in terms of compliance as well as projecting forward with data-driven goal-setting. Flourish, a comprehensive general software solution, can help you minimize compliance risk while optimizing your growth potential. To learn more about Flourish and its state-of-the art software, click here.