True or False: A Cannabis Business Entity Only Needs Enough Insurance to Meet the State and Local Requirements?
As with the other myths regarding cannabis insurance for legal marijuana operations, this one is false!
It is required by state and local governments to get insurance to cover minimum requirements for most businesses. Although requirements vary by state, the standard policy may only cover general liability, product liability and workers’ compensation. Sometimes standard form also covers contractual obligations with vendors, investors and landlords.
The reality of the matter is that meeting the minimum required limits for a cannabis business operation may not be enough coverage to protect your business. Within the cannabis industry, anyone in the supply chain can be liable if an unfortunate event was to happen – like a product recall for example. For this reason, it is highly recommended to look into insurance companies that are cannabis-focused. According to Mike Bush from National Cannabis Insurance Services, “Your insurance provider should be able to guide you through the coverages necessary to protect your business. They should point out how they are covering your exposures and provide options that are tailored to your business, while guiding you through the best options.”
Do not fall into the trap of believing that you will only need enough insurance to meet the state and local requirements. If you do, you will be running the risk of losing your business in the event of a significant insurance event. A cannabis claim can be very costly and wipe out your funds – draining you of the resources to pay employees, to buy supplies and materials, to pay for advertising and marketing, even to purchase new seed or new cannabis varieties. Get cannabis-specific insurance with policies that will meet requirements and protect your cannabis claims.
Please take a look at a recent product liability event in the cannabis industry here. Visit this blog post to read about a fire that caused much damage to a marijuana-growing operation. Check-out our many insurance policy coverage areas for cannabis operations here. And if you’re ready to engage with National Cannabis Insurance Services for proactive coverage to protect your business and operations, please get started right here. We look forward to speaking with you soon!