California Cannabis Insurance Requirements
California is one of the legal States with insurance requirements. Specifically, distributors are required to carry general liability with a $1,000,000 limit
per claim and a total limit of $2,000,000 per policy. These are called the occurrence limit and the aggregate limit. Otherwise, there are no specific cannabis insurance regulations from the State of California.
Each municipality has the authority to create their own requirements. For example, LA county requires cannabis retail businesses to hold insurance policies with $1,000,000 limits per claim and a total limit of $2,000,000 per policy. It’s important to be aware of both State and Local requirements when looking into insurance.
California Cannabis Claims
Fires happen, we’ve seen them in indoor facilities and greenhouses. Outside of San Francisco multiple greenhouses caught fire and 300 employees had to be evacuated. Fires are not always total catastrophic losses but they can damage your crop and property – hurting your bottom line. In 2017 there were wildfires, where the flames from a fire didn’t damage the crop but the smoke contaminated the plants, causing them to test positive for multiple chemicals.
In California in July 2018 a company submitted their product to be tested came back and passed in every way. It went to market. The Bureau of Cannabis Control decided to review the testing … a month later, the lab determined the product didn’t pass and issued a failing result. That product was recalled. We have seen several other recalls in California and they are expected to happen more and more as the industry evolves.
How Can Cannabis Claims be Covered?
Property insurance is intended to cover losses to your building, personal property (contents), business income and equipment due to a multitude of hazards including fire, lightning, theft and vandalism.
Crop coverage protects your crop throughout the growing cycle due to indoor and outdoor hazards such as fire, lighting, smoke and wind/hail.
Product liability is intended to cover bodily injury to a third party due to the consumption or improper labeling of your product.