July 27, 2020
Dispensary Insurance is crucial to prevent unexpected loss from accidents, theft, or fire.
“When you break it down there are really 3 main business types in the cannabis business sector with various jobs branching from there.
There are many features and benefits to obtaining insurance for your cannabis-related business. Most don’t even realize at this time that there is Cannabis specified insurance plans and packages that are tailored for these types of companies. When you break it down there are really (3) main business types in the cannabis business sector with various jobs branching from there. These are the Grow itself for medical or recreational marijuana and/or Hemp and CBD. The Lab itself also known as (MIP) on the THC side of things, whether this is for testing, formulation or extraction THC, CBD, or other various cannabinoids. And last but not least, the Retail Shop or Dispensary.
Cannabis insurance covers the seed to sale basis and this model is also a great example of what vertical integration really is; essentially having a company that has a grow, lab and dispensary of its own to supply its own supply chain = Vertical Integration (Maybe the most overused word in the industry) as it’s everyone’s goal to get to this point. These companies know firsthand just how much capital it really takes to get just one of these businesses off the ground. It is important to not overlook insuring your MJ/MMJ Grow, your extraction or testing lab, and/or your dispensary or CBD retail shop. Whatever stage your at with your cannabis-related business there is insurance for you available through Cannabis Insurance Business. You don’t want to dump money into a business without protecting yourself financially. Like any other business, you want to be licensed AND insured!
The benefits and features are broad and can be as protective or as minimal as needed or desired. The biggest prevention of people committing to cannabis insurance is cost and/or lack of knowledge. The good news is over time these premiums have come down as more carriers compete and come into undercut prices and earn business.
That is why its crucial to work with a Broker who works in the Cannabis space as they can wedge this to your advantage every year to make sure they get you the best deal available. They don’t want to lose your business either!
Most dispensaries will start by targeting General Liability which is the basis of commercial insurance. This is packaged with the Products Liability insurance for cannabis products also known as (GL+PL) in insurance terms. Any lease, trade show, sales contracts, etc. will require this kind of insurance. This is the first place and stage of insurance that is validated by any other business that considers doing business with you. This is also a neat way to vet out a company to see if they are credible and protected to do business with.
General Liability covers the basis of slips trips and falls within premises including bodily injury, Personal and Advertising Injury, employee benefit claims, medical payments, and hired and non owned auto. This typically comes in 1Mil/2Mil split limits meaning 1Million in max limits per occurrence and 2Million max limits for aggregated loss that takes place over time. These are typically on claims made forms so in Layman’s terms “ you have to make the claim within the effective policy period” This coverage is also rated off GROSS revenue so the more product pushed and sales made, the higher the risk and premium will be. An audit will take place annually to check and balance the costs of insurance to the risk rating.
The Products insurance piece protects and follows the product for consumer end-use. So if you got a consumer sick, they had an allergy which is most common, and or they suffered loss because of consuming your product this would come in to pay out the damages and brings legal defense. We have always referred to this as “pre-paid legal” for the products themselves. The products liability insurance is really a hot topic right now as the majority will require this to sell a product to a consumer for end-use.
Ready to learn more about insuring your cannabis & hemp products? Then contact us at (720) 999-3345 or at info@CannabisInsuranceBusiness.com. You can also learn more about CIB at https://cannabisinsurancebusiness.com/about
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Pushing the industry further one step and state at a time. Proudly serving all 50 states. – Cannabis Insurance Business of Loveland Colorado
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