Managing Risk in the Cannabis Industry
Starting a business and keeping it operating day-to-day can be a challenge. For the cannabis industry, this is especially true, as unique obstacles can quickly become roadblocks. Understanding how to minimize your risk (and how to prepare yourself for the unexpected) can be critical to the survival of your cannabis business. Here are a few ways to manage the risks inherent to the cannabis industry.
Understand All Applicable Laws
For any business, it is important to know the regulations that control your industry. As anyone operating in the cannabis space can tell you, this is much easier said than done. The cannabis industry continues to be controlled by a patchwork of laws and regulations created at the national, state, and local levels. These rules often contradict each other, further confounding cannabis companies trying their hardest to remain compliant and legal.
Consequences for failing to follow all regulations can be severe, ranging from fines and recalls to loss of license, so it is critical to remain compliant at all times. Take the time to review all applicable laws for all the regions in which you will be operating to be sure you are staying within the legal guidelines. Employee training will ensure this information is shared at every level of your business to prevent employee error leading to compliance issues.
It is also recommended that you work with partners that are experienced working with cannabis companies or, even better, dedicated to the cannabis industry exclusively. This familiarity with cannabis regulations will further assist you in remaining compliant.
One of the biggest risks that cannabis businesses face is theft. From cultivators to dispensaries, all levels of the cannabis industry are open to potential property crime. This stems largely from two factors: the black market value of cannabis products and the reliance of the industry, especially retail businesses, on cash.
There are many steps that can be taken by cannabis businesses to deter theft. Simply adding locks to gates and doors can keep opportunistic thieves at bay. Video cameras in strategic places around your property can cause potential thieves to think twice and can help lead to a more favorable outcome when law enforcement gets involved. On-site security personnel also help deter theft and, when needed, stop criminal acts as they happen. In some regions, required security measures are strictly outlined in cannabis regulations. In others, businesses have more leeway in how they choose to secure their assets from theft.
Smart Cash Management
As mentioned above, the mostly cash-business nature of cannabis makes it an attractive target for theft. Smart cash management, like limiting cash held on location or securing cash and other assets in a locked safe, can protect your cash and limit access to it by thieves.
Obtaining banking services is another important step for cannabis businesses to take when possible. Banks offer far better security for your assets and are often better insured against loss. Additionally, gaining access to a credit processor will minimize your reliance on cash in your everyday business.
Legislation like the SAFE Banking Act aims to improve banking options for cannabis businesses by protecting banks and other financial service providers that work with clients in the cannabis space.
Insuring Against Inevitable Risks
Of course, no matter how well you secure your assets against risk, there is a chance of an adverse advent, such as a robbery of your farm or dispensary, fire or flood damage, or accidents. Taking out an insurance policy for your cannabis business that secures against common risks ensures that when the unexpected happens, you are reimbursed the funds you need to recover and resume operations.
Choosing a Qualified Cannabis Insurance Partner
If you don’t currently have an insurance provider, it is important that you find a partner with prior experience working with cannabis companies and the necessary knowledge of cannabis regulations to ensure your business is fully covered against potential risk. Contact CannGen here to see what coverages you need to protect your cannabis business.
More Cannabis Industry News
Want to stay up to date on the latest? You can find more on important topics in the cannabis industry on our news page.
Or get more information about comprehensive insurance solutions for the cannabis, CBD, and hemp industries from CannGen here.
Disclaimer: Information shared is for general purposes only.