Due to the current legal circumstances surrounding cannabis, it won’t be especially surprising if you have trouble finding insurance for your company. Here’s some information about this difficulty, including what you can do to get around it.
Cannabis Insurance Problems
The Department of Justice in the U.S. currently has a hostile approach towards the Cannabis industry. Indeed, this is likely to increase in the future given the growing gap between federal and state sensibilities. An example of this was the memorandum issued 2 years ago from the DOJ about upholding the law on the issue, namely the fact that Cannabis is still a controlled substance and not legal for use.
State vs. Federal
Many states have a different view, with many having already made it legal for medical or recreational purposes. However, if you’re focusing on growing cannabis, you have to worry about federal and state law. Many commercial insurance providers that exist on a national level are highly wary of insuring any company that deals in cannabis.
This is because of the question of federally-controlled substances, but also because of the fact that the FDA has still only OK’d one product for use so far, and no others. Epidiolex is for seizures. This is hardly great news for cannabis growers and it explains why many insurers won’t grant full insurance coverage to these kinds of companies.
There’s also the fact that cannabis-related companies or CRBs, often have to deal in cash only due to a lack of federal support for credit cards in the industry. They also have to worry about accident liability, crop failure liability, and so on, all without being able to easily find insurers.
Non-Traditional Insurance Providers
All this leads us to potential solutions to this problem. There are some companies that will insure you anyway, despite the risks. They generally come from non-traditional approaches, and this can be reflected in the cost. Each potential company will serve a select number of states. Some serve all states, while others have more limitations. Examples of non-traditional insurance options you can try include AFIG Cannabis Insurance, for example, which serves many states but leaves out dicier states like Georgia. Then you have MFE Insurance, which serves all states excluding only MA, WY, ND, SD, and Arkansas.
Other companies like Cannabis Insurance Company or SafeHerb will serve all 50 states. Once you have your list, the next thing you need to do is narrow it down by starting with what state you’re in and eliminating the companies that don’t serve that state and then looking at the policies in order to determine your best option.
Getting the Right Coverage
Coverage you might need, depending on your business, starts with cultivation insurance. If you grow your own product, then you may need insurance for your plants, your equipment, and your income in general in case of some calamity. As a grower, you likely realize that a lot of things can go wrong and it’s helpful to have insurance in case they do.
Hemp CBD and Building
Other related insurance that can be helpful includes hemp-CBD insurance. This type of insurance will protect those who grow hemp or CBD products specifically, so it won’t necessarily be the kind you need if you’re just growing and sell full cannabis plants. It’s nice to have specific insurance for your specific situation, however, if your business has anything to do with extracting wholesaling, or simply selling CBD or hemp products retail.
You may need building insurance to insure the building you use to grow your product, for example. Something can go wrong with the building in terms of temperature control or some other environmental factor like having enough power, water, and so on to make sure that the plants don’t die. It’s always nice to insure against this.
Laboratory and Dispensary
Another similar type of insurance that could help in this situation is laboratory insurance. If you have a lab you need for extraction, testing, or any other part of your business, it’s a wise idea to insure it. Indeed, your business would be in serious trouble if anything out of your control ever occurred to disrupt your lab’s operations.
You may also want insurance for your dispensary if your business involves this. Insurance for dispensaries will cover operators, property costs and inventory costs. It can also cover liability you might incur as part of your operation such as workers’ compensation. It can cover loss of income in general if you want to insure against this as well.
Transportation, Product, and Combination Insurance
You can often miss and match these types of coverages depending on the sort of operation you’re running. There could be insurance for the transportation of the products and the delivery methods that you use. This iincludes if the product is lost due to some calamity or just stolen. You could get insurance for liability on the product in case someone is injured while taking it.
Product liability is a common reason for someone to sue you, and people are highly sensitive to cannabis.
Checking for Payouts
Another problem you could face is the fact that some insurance companies may resist paying out a policy even if you should qualify based on liability. This is because some insurers may try taking advantage of the legal grey areas currently extant.
As a result, it’s important to thoroughly check out any insurance company ahead of time. This could be through review sites. However, it would also be wise to hire financial experts to advise you on the best course of action.