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New legal cannabis laws and referendums on the ballot each year open new markets for the business, which is expanding rapidly. This gives many entrepreneurs and business owners a chance to shift their focus toward a global, high-growth sector with significant room for expansion.
According to industry research group New Frontier Data, the yearly sales of cannabis in the United States are expected to reach $72 billion by 2030. This estimate is made at a time when cannabis is still illegal on the federal level, despite the fact that recreational cannabis programs have been legalized in 21 states, two territories, Washington, D.C., and 37 states that have medicinal marijuana laws.
It’s simple to see the cannabis sector as consisting of farmers who grow the plant, manufacturers who process it into goods, and dispensaries that sell those goods. The cannabis market, though, is a lot more intricate and diverse.
Businesses in the cannabis industry confront more difficulties than start-ups in other industries. Your success in the cannabis market will depend on how well you navigate these difficulties in the early stages of your company and how well you establish a foundation that will enable you to develop and adapt when regulations inevitably change.
To assist cannabis business owners in overcoming this issue, let us examine the challenges that some types of cannabis businesses encounter and how they can resolve them with the appropriate cannabis insurance products.
Running a successful dispensary depends on having the correct insurance coverage that can protect you from changing legal requirements, regulatory changes, and general business hazards.
Other insurance policies, in addition to the standard ones like general liability and workers’ compensation, might also help protect your company from loss.
Property insurance coverage can help in securing the inventory and other business property of your business against fire, theft, and natural catastrophes.
For dispensaries, product liability insurance is also essential, and it is typically bundled with the appropriate commercial general liability policy. The consumer may hold you responsible if a product results in injury, disease, or other side effects.
Cultivators face a wide range of operational risks and hazards, which include but aren’t limited to equipment breakdown, fire, theft, and vandalism. Cannabis and hemp cultivation generally requires significant infrastructure investment. This includes potentially vulnerable things like machinery, lights, security, seeds, and crops at various stages of maturity.
Fortunately, the proper cannabis insurance program can help protect your investment.
The two most essential types of insurance for farmers are crop insurance and property insurance. When crops are grown in climate-controlled spaces like greenhouses or warehouses, crop insurance is easier to come by. Underwriters are starting to notice that outdoor crops are becoming more and more of a requirement as a result of the rise in hemp growers and the Farm Bill.
As businesses interact with wholesalers and dispensaries, cargo insurance would be a good addition to protect inventory in transit.
Cannabis manufacturers are subject to stringent licensing requirements based on the inherent risks that come with the license type.
Moreover, manufacturing plants and equipment are costly investments that should be secured by a good commercial property policy.
Depending on the equipment which a business utilizes, valuable items can be specifically listed on the equipment policy for their entire retail value. Equipment breakdown policy can be added to increase the policy’s value. A product liability policy can protect you if a customer becomes ill and is typically required when selling products wholesale to dispensaries.
Perhaps one of the most interesting aspects of the cannabis industry is delivery. You may face a complicated set of risks if you are a delivery-only dispensary or strictly a distributor within that area. Personal auto insurance will not cover an employee in the event of an accident or robbery because this policy typically restricts business use.
That means your company could be held liable for vehicle damage, injuries, and medical bills. Using hired owned and non-owned policies can help your risk management program. Having a good cargo policy for your products once they leave your facilities is also a best practice.
Business auto insurance coverage is required if a license holder plans to establish a fleet of vehicles. Evidently, the more vehicles your company holds, leases, and operates, the higher the cost of auto insurance.
It’s clear that legal cannabis businesses face a unique set of risks that necessitate cannabis insurance expertise, which is difficult to come by in the current market, especially when working with legacy brokers.
However, the situation is gradually improving, and it is now easier than ever to create an effective risk management system by working with the right insurance provider who understands your cannabis business’s unique needs.
If you want to ensure that your cannabis business has the exact coverage it requires with no potentially costly gaps in coverage, feel free to contact our Cover Cannabis experts at any time for a free consultation.