Cannabis-related businesses may need several coverage types to have a well-rounded cannabis insurance policy. For example, you may want coverage for lawsuits over injuries in a storefront and also coverage to help repair or replace equipment in a greenhouse.
A business owners policy (BOP) is a good way to package several coverage types into one policy. A typical BOP includes business interruption insurance, property insurance and general liability insurance. You can customize a BOP with additional insurance based on potential problems you want to cover.
A cannabis business's biggest risks can be theft, general liability and product liability, according to the National Association of Insurance Commissioners.
That said, you may not find many options for buying cannabis business insurance. In California, for example, which legalized recreational marijuana in January 2018, cannabis insurance is available from "surplus lines" insurers but large commercial lines insurers have been slow to get on board. The California insurance commissioner has called on the industry to offer more cannabis insurance.
California recently approved a business owners policy called CannaBOP, which is designed especially for cannabis dispensaries, distributors' storage facilities, processors, manufacturers and other cannabis-related businesses. While the policy form itself is approved, insurers in California have been slow to offer it. This may be partly because of questions about the legality of business due to federal law banning marijuana use.
Basic cannabis insurance
Commercial liability insurance
This typically includes a legal defense, settlements and judgments if you're sued for injuries or property damage. For example, if a customer slips and falls in a store and sues.
Business interruption insurance (also known as business income coverage)
If a problem covered by the policy, such as theft or fire, causes you to temporarily close or relocate the business, this helps cover expenses and can replace lost business income.
This covers your building and its contents from problems like fire, theft and vandalism. Contents covered by the policy might include inventory, growing equipment and outdoor signs.
Crop insurance
If you're a grower, problems like theft, vandalism and fire can destroy an entire harvest. Whether you grow indoors, outdoors or in a greenhouse, crop insurance can be essential for your plants.
If a product causes injury, illness or property damage, this helps cover legal expenses, including judgments and out-of-court settlements. For example, if you're sued because product was improperly labeled or misleading.
Workers compensation helps pays medical bills and some lost income for employees who get injured or sick from work-related tasks.
Additional cannabis insurance
Talk to a business insurance agent about the right coverage for your specific risks. Below are some of the more common cannabis insurance needs.
Commercial auto insurance : A personal auto insurance policy usually won't cover you for any accidents while using a vehicle for business purposes. For example, if you're using your car to pick up greenhouse supplies, you'll want commercial auto insurance.
Employee dishonesty coverage : This protects the business from losses due to dishonest acts by employees, such as theft.
Equipment breakdown insurance : Your cannabis business might rely on several pieces of equipment to keep it up and running, such as growing lights and irrigation systems. This coverage helps repair or replace broken equipment and may help with lost income if business is interrupted.