What are My Legal Obligations for Insuring My Cannabis Company?
You already know it is a good idea to insure your cannabis business, but with the cannabis industry continuing to exist in a legal gray area, it isn’t always clear which path is the right one to best protect your assets. Conflicting state and federal laws add further difficulty in knowing just what insurance coverage is available and which coverages you need to obtain in order to remain compliant with general business and specific cannabis regulations.
What is Business Insurance?
Cannabis businesses face many of the same risks that other businesses face, including those in the agricultural, manufacturing, and retail industries. These risks include employee accidents, damage to the property of others, injury to consumers, and more.
Basic business insurance policies protect commercial entities against these types of claims, but it is also possible to insure assets such as your property and buildings, equipment, manufacturing supplies, and even your cash and finished products. However, depending on your market and type of business, not all of these coverages may be necessary.
What Coverage Do I Need?
Insurance coverage requirements vary from state to state, so there is no easy answer to what type of insurance you need for your cannabis business. Some states don’t have any specific insurance coverage requirements for cannabis companies above what is already mandated through standard commercial business regulations.
Other states have strict requirements for cannabis businesses. For example, Massachusetts requires minimum levels of liability coverage for their cannabis businesses, as does Washington. Pennsylvania stipulates only that cannabis companies secure liability insurance in an “appropriate amount”.
It is strongly recommended that you review the regulatory requirements for the states in which you operate to better understand the level of insurance coverage you need in order to remain compliant. Working with an insurance partner that is well versed in the specifics of cannabis insurance will further guarantee you are getting the right coverage for your company.
Regardless of the markets you operate within, you’ll want to get basic coverage, including general liability and workers compensation insurance. These coverages protect your business against claims like injury or property damage due to accidents. Product liability may also be required if your business manufactures or sells cannabis products, protecting your company if your products cause harm to consumers.
Why Should I Secure Comprehensive Insurance?
Although some insurance coverages are mandated through local cannabis regulations, this minimum required coverage will not fully protect your business interests against potential adverse events. Basic liability coverage will reimburse financial losses from third-party claims, but not if you face losses or damage due to fire, flood, theft, etc.
Adding coverages like auto insurance, property insurance, and crop insurance for cultivators helps to protect your business’s most critical assets. While the unexpected can be a challenge to overcome, proper coverage can ensure you have the funds to rebuild your business if necessary.
Choosing a Qualified Cannabis Insurance Partner
If you don’t currently have an insurance provider, it is important that you find one that has experience working with cannabis companies and the 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 unique business.
More Cannabis Industry News
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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.