Life happens. Stuff happens. Is Your Cannabis-Related Business Covered?

Your business success and stability are most at risk by unpredictable and unforeseen circumstances, from a broken down vehicle or piece of equipment, to water or fire damage, to lawsuits from employees, customers or suppliers.
Managing these risks through proper coverage protects you from the unexpected, and by doing so protects your business, your profits and your life.

From Leafy to Lush.The legal marijuana business
continues to prosper

Are you protected?
Cannabis 360 writes policies
in all 50 states

WHERE DO YOU FIT?

The U.S. cannabis business is a growing, multi-layered industry. But your role is unique, and your coverage should be too. Here’s how we define some of the different businesses in the industry.

GROWERS & CULTIVATORS

Farms, Independent Growers, Greenhouses, Hydroponic Growers

For companies growing and supplying legal cannabis. Crop coverage protects both living and harvested plant material. Stock coverage protects mature, harvested plants that have been processed.

DISPENSARIES & RETAILERS

Medical and Recreational Dispensaries, Cooperatives, Collectives

For businesses selling legal cannabis. Protection is needed for general liability, product liability, property, business income and cyber-related claims.

PRODUCT MANUFACTURERS

Bakeries, Oil Producers, Medical Goods Producers, Paraphernalia Producers

For all businesses producing cannabis and cannabis-related items. Protection is needed for general liability, product liability, property, business income and cyber-related claims.

PROPERTY OWNERS AND MANAGERS

Property Management Groups, Landlords

For landlords and property managers of cannabis-related businesses. Protection is needed for property damage or loss, general liability, business income and cyber-related claims.

TRANSPORTATION SERVICES

Cannabis Transporters, Delivery Services, Armored/Secure Transporters

For business related to the safe transportation of cannabis products. Protection is needed for vehicles and claims around vehicle injuries.

ANCILLARY BUSINESSES

Hydroponic Stores, Testing Labs, Head Shops, Building Trades

For all business related to the operation and physical locations of businesses that grow, manufacture or sell cannabis-related goods and services. Protection is needed for general liability, product liability, property, business income and cyber-related claims.

Don’t see yours here? We probably cover you. Message us now to find out or book a virtual consultation now, it’s free.

Curious what a business like yours might need?Answer a few questions and find out.

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Cannabis 360 Products

General Liability

Protects you, your employees and your cannabis-related business from legal claims involving bodily injury or property damage from accidents on your premises or from your products, operations or advertising.

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Property

Covers losses to your property caused by fires or explosions, theft, damage from vehicles or airplanes, or acts of vandalism.

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Workers’ Compensation

Pays for an injured employee’s medical treatment and can assist in replacing lost wages; protects your employees, business and assets.

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Crop

Protects your marijuana crops during the stages of growth.

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Stock Throughput

Addresses potential gaps in insurance for supplies or purchases that are in transit.

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Product Liability

Protects against bodily injury and property damage claims.

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Management And Professional Liability

Protects your cannabis-related company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes on your part or because you failed to perform some service.

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Business Income

Replaces lost net income, covers continuing expenses, and pays for relocation expenses and advertising fees if your cannabis-related business is forced to close.

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Cyber

Protects your cannabis-related company in the event of a data breach or other cyber threat, including exposures created by your employees who work on computers.

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Commercial Auto

Covers financial responsibility if you or an employee is at fault in a vehicle accident and people are injured or their property is damaged.

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Bonds

Guarantees you some type of scheduled payment in the event of a payment default.

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Builders Risk

Covers buildings and structures under construction, as well as related equipment.

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Employee Benefits

Encompasses a variety of products, including group health, dental, vision and life insurance.

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Supplemental products

Covers additional aspects of your cannabis-related business, such as cargo, crime, and directors and officers. Umbrella policies fall under this area too.

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General Liability

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Commercial liability insurance covers you, your cannabis-related business and your employees from claims involving bodily injury or property damages resulting from accidents on your premises or from your products, operations or advertising, up to the limits of your policy. Policies shield you from the expense of out-of-court settlements, litigation and judgments awarded by courts.

Why general liability insurance is important

Many states have licensing requirements for cannabis businesses that mandate insurance and/or bonding. This is not a bad thing. The simple action of being in business, especially a high-risk, cannabis-related business, creates an environment of liability, and exposure typically exists before any other in the business development cycle. As a business operator, you take on liability. It is your responsibility to provide appropriate support for that liability.

What to ask

Having a policy is great, but knowing your policy is critical. Pay special attention to what is covered in your general liability policy. For example, it’s important for a grower to distinguish between being covered for crop and being covered for stock. The right protection will cover you from losses of either in the event of an unforeseen calamity.

Property

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Basic property insurance usually covers losses caused by fires or explosions; theft; damage from vehicles or airplanes; or acts of vandalism. You can add more coverage for events such as earthquakes and breakage of glass.

Why property insurance is important

Property insurance will protect your company’s financial strength by covering the cost to repair, replace, or rebuild property. As available, coverage can be added to allow business operations to continue at an alternative location during the restoration period. Property is extremely expensive to replace. Having the proper coverage in place ensures limited impact to your cash flow in the event of a loss.

What to ask

Have you looked beyond the basic limits of your property policy? What do the sub limits say? Do they provide adequate coverage? For example, if an electrical disturbance triggers a power surge that causes significant damage to your office equipment, are you covered appropriately? Also, do you have an approved safe that’s properly installed? For example, a safe’s minimum requirements are 800 pounds with a one-hour fire rating; if the safe is under 2,000 pounds, it must be bolted to the floor. Depending on your operation, it may affect your ability to obtain affordable insurance.

Workers’ Compensation

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Workers compensation insurance protects your employees, business and assets. Coverage will pay for an injured employee’s medical treatment and can assist in replacing lost wages.

Why workers compensation insurance is important

Legally, you are obligated to provide workers compensation insurance to your employees. Additionally, it is integral in promoting and sustaining a productive and supportive working environment. Your employees commit to coming to work everyday, and this coverage protects them while on the job.

What to ask

Coverage points beyond the workers compensation policy should be considered. What are you doing before a loss? Does your insurance company offer resources to support the development and implementation of safety programs and return-to-work programs?

Crop

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Crop insurance protects your crops during the stages of growth, which include living plant material, harvested plant material and finished stock.

Why crop insurance is important

Most beneficial to cannabis growers and suppliers, crop insurance provides protection for the revenue-generating product being grown and sold and covers plant risks prior to the sale. While you may implement other risk management tactics in an attempt to mitigate risk potential in each growth stage, crop insurance provides the necessary save-all in the event of unexpected and unintended damage to your cannabis crops.

What to ask

Crop insurance is extremely different than stock insurance. Crop insurance exists because your stock coverage only covers “finished product.” It is important for you to consider the entire plant life cycle prior to sale and all of the potential for harm. In each stage, the number of plants, as well as their value in that stage, should be taken into consideration. Know what is it worth in the following stages: seed, vegetative, flowering, harvested. And then ask your agent about appropriate coverage.

Stock Throughput

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Stock throughput coverage solves for potential gaps in your insurance for inventory or goods – all the way from seed to sale. In getting cannabis products to market, this type of policy protects growers, processors, manufacturers or retailers who have lost or damaged products not covered by other policies, such as property insurance, even while the product is in transit.

Why stock throughput insurance is important

Stock throughput covers the value of your materials, products and goods for the length of time that your business has an insurable interest in them – even while goods are in transit. This type of coverage is becoming increasingly important as the cannabis industry develops because of the many stages that products move through before sale.

What to ask

If you are a retailer, manufacturer, processor or grower, you should consider stock throughput coverage, as you are most likely to see the type of risk that this policy is meant to cover. Stock throughput insurance provides you with expansive coverage and even covers losses caused by war, strikes, riots and civil commotions, and transit related terrorism. Also, unlike a property policy, this policy carries a fixed dollar deductible, not one based on a percentage of your property values. Ask your agent if stock throughput insurance will provide a solution for potential coverage gaps as your products move from seed to sale.

Product Liability

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Liability insurance protects you from bodily injury and property damage claims resulting from a defect in the product you sold, manufactured, or distributed.

Why product liability insurance is important

The cannabis industry supply chain is multi-layered. A retailer may be selling a product that has been processed by a few different handlers. The manufacturer might supply the initial cultivated product, but a processor may manufacture the product for a different use before it goes to sale. Additional exposures exist as the product is transported by one or more carriers. Wherever your business falls in this supply chain, you are at risk of product liability claims, so be sure to take steps to protect yourself.

What to ask

It’s extremely important to evaluate the part of the supply process in which your business participates. In considering a product liability policy, remember that it doesn’t just provide coverage for a covered claim, but also provides defense from suits brought against you. In the cannabis industry, consider using a third-party testing lab; this will most likely be requested of you anyway when applying for coverage.

Management And Professional Liability

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Professional liability insurance protects your cannabis-related company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes on your part or because you failed to perform some service.

Why management and professional liability insurance is important

Mistakes happen, and sometimes deadlines are missed, because of factors outside of your control. Human error and extenuating circumstances are normal situations in business; covering them is an effective way to secure protection for claims against you for not fulfilling customer promises.

What to ask

Are your employees’ duties correctly classified? On a management and professional liability policy, every employee in the legal marijuana industry is specifically classified based on his or her operation. Incorrect classifications could result in coverage being negated.

Business Income

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If you have property loss and your cannabis-related business is forced to close temporarily, business income coverage can help you replace lost net income, pay for continuing expenses, and cover relocation expenses and advertising fees.

Why business income insurance is important

Cash flow is critical to all businesses. Business income insurance can provide an important element of protection for your business’s cash flow both during and following a loss, such as destroyed inventory. Even if a loss is covered from a property perspective, you must consider the money lost while you are unable to generate revenue.

What to ask

Losses outside of your direct operation can occur and impact your bottom line. Does your business depend on another business for supplies or for general success (think supply chain analysis/contingent income)? If so, this can be insured against. For example, if the flagship store in a strip mall suffers a loss, a cannabis dispensary located in the same mall will likely see less foot traffic as a result.

Cyber

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Cyber insurance protects you in the event of a data breach or other cyber threat. In some cases, coverage may exist for human error that occurs while sharing sensitive customer information.

Why cyber insurance is important

Cyber liability exposures have become more common with increased dependence on technology for business operations. Hackers are specifically targeting small- and medium-size businesses due to the higher likelihood that less resources are spent on cyber attack prevention, such as firewall security.

What to ask

Cyber liability coverage is integral to covering the exposures created by your employees performing their daily operations. This insurance can limit the impact of an employee accidentally sharing personal information, giving unauthorized access to personal information, or clicking on links that contain viruses.

Commercial Auto

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Business auto liability insurance helps cover the financial responsibility if you or an employee is at fault in an accident and people are injured or their property is damaged. A minimum amount of commercial auto liability insurance (or proof of financial responsibility) is required in most states.

Why commercial auto insurance is important

An accident may occur while using a vehicle for cannabis-related business operations. This coverage will help cover costs to repair damaged vehicles, as well keep transportation in place while repairs are being made.

Auto accidents can be very costly occurrences; commercial auto insurance alleviates some of the pressure and cost during the process of repairs or replacement of vehicles. Aside from medical costs, a big ticket item to consider is the litigation costs that the insurance company will cover.

What to ask

Do your employees rent vehicles for travel? If so, do they rent the car in their name or the company’s name? This important distinction can be the difference between coverage responding — or not responding — in the event of a claim.

Bonds

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Bonds are used for a variety of purposes, with most commonly falling under the umbrella of contract bonds or commercial bonds. As a broad definition, a bond is typically a type of financial guarantee where the insurance company guarantees some type of scheduled payment in the event of a payment default by the you as the principal. The definition varies depending on the type of bond.

Why bonds are important

Bonding is an important tool for you to provide proof of financial responsibility. They are sometimes required by contract or law, so it is important to have a baseline understanding of bonds – and know where to obtain them.

What to ask

Different bonds are required in different situations and as mandated in certain contracts. Bonding can be complex, and it’s tough to know which bonds will position your business best as required by law. When your business is in need of bonding, ask questions to understand the details. Frequently used bonds include contract bonds (payment and performance bonds, maintenance bonds, or miscellaneous bonds) and commercial bonds (license and permit bonds, ERISA bonds, utility bonds, fidelity bonds, and more).

Builders Risk

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Builders risk insurance covers your buildings and structures under construction and the equipment being used for the project. Builders risk policies also provide you coverage for faulty construction and debris removal needed after a loss.

Why builders risk insurance is important

Builders risk policies are designed specifically to cover new construction/development projects, rebuilds and renovations. This coverage helps you to eliminate liability confusion relating to a specified construction project. The policy provides an all-encompassing level of protection for the project (the structure, materials being used, and debris removal from a covered loss). In the event of defective workmanship, a builders risk policy will cover needed corrections.

What to ask

If you are a business owner, contractor, subcontractor or financier who is undertaking new construction, considering a build out or starting renovations, ask your agent if a builders risk policy is needed to protect you while the work is underway.

Employee Benefits

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Supporting the health and wellness of employees is part of running a good business. Offerings typically include group health, dental and vision plans. Life insurance plans are also part of the mix.

Why employee benefits are important

Employees are the most critical component of any cannabis-related business operation. Employee benefits provide the necessary compensation beyond salary to help maintain and improve employees’ standard of living. Benefits are a great way for you to show your commitment to the employees that work hard for your business success.

What to ask

Employee benefits plans should be customized to meet the needs of your business, based on your size and number of employees. Within group health plans, for example, you have the opportunity to offer HMO and PPO plans, as well as HSAs and FSAs. Group dental, vision, and life plans are additional ways to support employees’ health and future-planning needs.

Supplemental products

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A range of supplemental products are sometimes needed to fill in where your other policies leave off or to cover exposures unique to your business. Supplemental products include, but are not limited to, policies for cargo, crime/employee dishonesty, employee practices, and officers and directors. Umbrella policies are also an important piece of supplemental coverage.

Why supplemental policies are important

Other policies can shelter you when extra protection is needed in areas of your business operations where you are most vulnerable to liability or loss. Umbrella policies, for example, are often considered vital in extending where other coverage leaves off so you are not held liable for claims and lawsuits or excess damage that goes beyond your current policy limits or for claims that are simply not covered by your other policies.

What to ask

Ask about any areas of your business where you feel more risk exists. Also, be sure to disclose all aspects of your organization to your agent to make sure you’re covered, even when other policies are exhausted.

Seem overwhelming?

Take a moment to Answer a few questions to find out what a business like yours is likely to need.

GIVE US A TOUR. AND WE’LL GIVE YOU A QUOTE.

Have a Cannabis 360 business specialist learn about your business through a Skype consultation.

IGNORING THE ‘WHAT-IFS’ WILL NOT
MAKE THEM GO AWAY.

Get a clear picture of your risks before you act or ignore.

WHAT IF while on a break at work, an employee from True Grow posts on Facebook a claim that illegal pesticides are being used for an operation at a competing grower's location. The competing grower denies the allocations and files a suit against True Grow.

The main takeaway is that the commercial general liability policy provides coverage for the business, the business owner, and the employees from claims involving bodily injury or property damage, up to the limits of the policy. Bodily injury does not only mean physical injury, it can also mean damage to image, which is considered advertising injury. In True Grow’s situation, a commercial general liability policy provided defense costs for True Grow because this claim was covered as a result of advertising injury to the competing grower.

WHAT IF an employee at a medical clinic is in the process of emailing patients a notification of license expiration. In the process of sending emails, the employee accidentally attaches the incorrect document: a patient's personal medical information. The patient files a lawsuit for negligence of privacy.

In today’s economy, technology for business operations has become extremely complex and sophisticated. Just the same as business owners would explore insurance for their general liability risks, they should explore the same for cyber risks. Insured parties should have detailed discussions with their agents about all operations where technology is used. In this case, since the medical clinic needs email to communicate with patients, it should be thinking about the risk that this opens up for the clinic.

WHAT IF over the weekend, a thunderstorm knocks out power for Grow Green, a grow operation, and surrounding businesses. When the power is reestablished, a surge destroys the power source for multiple lights and the HVAC system at Grow Green.

Property insurance is critical to protecting a company’s investment in its property. However, more important than the policy itself is understanding what is covered by it. Property policies will generally have sub limits for different causes of loss. The issue in this scenario is what is contained in the property policy. Is Grow Green covered, and if so, does it have enough coverage for the amount of property it has? It’s important for business owners to request a description of the sub limits when a quote is being proposed by an agent.

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About Cannabis 360

Cannabis 360 is a full-service risk management firm that specializes in insurance support, bonding and employee benefits for the cannabis industry. We are an offshoot of a 50-year-old insurance and bonding company that focuses on personalized solutions for business customers, rather than on products and sales.

In that same spirit, Cannabis 360 provides customized risk management solutions for our cannabis industry clients, from growers and distributors, to processors and transporters, to testing labs and other ancillary businesses. We are ardent advocates of regular risk management reviews to protect cannabis businesses against emerging exposures and to revisit and adapt to the volatile regulatory environment.

Through our work in this field, we support the development of cannabis as a sustainable and legitimate industry – one with substantial medical and economic benefits.

Cannabis 360 is honored to be a part of the emerging cannabis industry and to play a supportive role in stabilizing and protecting businesses through a holistic approach. This means not only covering customers’ direct operations from seed to sale and beyond, but also covering the nuances of risk that every business is faced with, regardless of industry.

Based in metro Detroit, Cannabis provides solutions in all 50 states, with current customers reaching from the Midwest to as far as New Mexico. In supporting the growth of the cannabis industry, we participate in a variety of professional associations.

Professional Affiliations

Contact Us

cannabis 360

26622 Woodward Ave.
Suite 200
Royal Oak, MI 48067

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Tel: 877.626.4741