With any business in any industry, the various types and amounts of insurance coverage are going to differ depending upon the operations of the business and what exposures those operations create. When it comes to the cannabis industry, this point cannot be stressed enough because it emphasizes the need to have a full understanding of your operations and what exposures accompany those operations.
This may seem like an odd thing to stress because you would think that the owner would know his/her operations inside and out and that could very well be the case. However, the issue arises with the exposures – an owner may very well know every operation that his/her company undertakes but he/she may not be aware of the exposures that those operations create. Think of the following example:
You are the owner of a cultivation facility that delivers wholesale to dispensaries around you. You have all of your operations ready to go: seeds are ready to plant, equipment is running and ready to go, and security measures are all in place.
Initially, you have decided to have your dispensary partners come to your facility and pick up their order but after a very successful three months, you decide that you’re now going to deliver to them instead. Without really thinking that it’s that big of a deal, you have your employee Bob load the order into his car and send him on his way.
Thirty minutes later you receive a call from Bob saying that he got into an accident while on the delivery. You ask if he is okay and if the other driver is okay – Bob says he is fine but the other driver broke their leg. From the outside, this may not seem like that big of a deal. However, read and see how this accident will snowball. It will start when Bob’s personal auto Insurance cancels his policy and doesn’t pay for that accident because he never disclosed to them that he would be using his vehicle to transport cannabis.
After you find that out, the next call you will get is from the injured parties’ insurance company or lawyer who is now coming after you for the accident. Just because this owner didn’t fully understand the exposures that his/her operations created, he/she will now be on the hook for that injured driver’s damaged vehicle, his/her pain and suffering from the broken leg, and any medical costs associated with that injury!
All of this could have been avoided, but without understanding the exposures that certain operations create, business owners aren’t aware that they are even being left vulnerable to something like this!
This example is just one of a plethora of ways that your business could be left exposed so how do you make sure that you are fully protected? Below you’ll find the two best ways to protect you and your business:
The best way to prevent your business from being left vulnerable is to find an agent who not only understands the cannabis industry but also who understands your operations and the exposures that they create. Take the example above; if your agent isn’t aware of the aftermath that having employees drive personal vehicles can have, then he/she won’t be able to offer a solution to fix it. This is why choosing the right agent is a crucial aspect of the insurance process because your agent is the one who will be able to guide you and explain why certain exposures exist and how to make sure that you are protected from them.
The next best thing to do is be proactive – the worst time to inquire about insurance is after suffering a loss. Think about it like wearing a seatbelt: having the seatbelt on before an accident will prevent you from suffering an injury, but putting the seatbelt on after the accident won’t do you any good.Insurance works the same as we need to implement coverage BEFORE you suffer that loss because not only will it protect you but suffering an uninsured loss will make obtaining coverage even harder and will result in a higher premium or, the worst case, not having any insurance carrier willing to insure you because now they view you as a risky business.Patients and customers are relying on you and your business to be proactive to ensure that your business is protected properly.
The last thing that you and your patients/customers need is for them to show up one day to find out that you had to close your doors because you couldn’t recover from a loss/claim that could have been prevented in the first place. You’ve taken the risk of joining this industry so don’t take on the unnecessary risk of operating without the proper coverage in place!