Insurance Policies Cannabis Business Owners Need

Rohan Mathew

Updated on:

Business owners consider the best ways to cover their new venture and assess liabilities that could arise while selling cannabis products. The legalization of CBD and cannabis products dictates where the company can sell their products. Insurance policies define how much protection the owner has if the unexpected happens.

Product Liability Coverage

Product liability coverage is a must for any company that manufactures products released to the public. All it takes is one consumer to sustain an injury, and everything could spiral out of control. Consumers report dangerous products to the Federal Trade Commission’s Bureau of Consumer Rights, and the federal agency tests the product and could issue a product recall. The findings determine if the manufacturer must pay for medical costs for the injuries, refund the cost of the product, or change the product.

With a product liability lawsuit, the consumer must prove that they used the product as directed on the packaging. If the manufacturer didn’t place adequate warning labels, they could face liabilities because of this failure. Forensic testing shows how the product generates injuries, and the tests show if the consumer used the product properly. Purchasing the policy helps the company avoid financial losses because of lawsuit awards. Garrity Insurance has more coverage for manufacturers and protect the business owners against these prevailing liabilities.

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Employee Protection Liability

Employee protection liability coverage provides help for companies that have existing workers. Operating a business could lead to liabilities when hiring and firing workers. Federal employment laws give workers protection against sexual harassment, discrimination, wrongful termination, and failure to promote because of discrimination.

As a business owner, they could face lawsuits if they do not create company policies to protect their workers and future employees. The company policy must outline rules for supervisors and workers to prevent sexual harassment and provide a safer way to report violations. All workers sign and acknowledge the sexual harassment policies.

With discrimination, it is paramount to set up policies to mitigate the risk of discrimination lawsuits. Purchasing employee protection liability provides funds to cover the cost of lawsuit awards and legal fees. Business owners control the cost of the premiums by initiating more ways to protect their company and its workers through ironclad company rules and guidelines for hiring and firing workers.

Commercial General Liability Coverage

Commercial general liability coverage protects the company against customer-related injuries and accidents. It covers breach of contract, property damage caused by their workers, and liabilities that arise when selling products or providing services to clients. The insurance prevents a complete shutdown of the company because of lawsuit damages. It offers funds to complete repairs, cover medical expenses, or provide a settlement for the customer.

Products liability, premises liabilities, and further liabilities are included in the coverage. It is the primary policy for liabilities and works well with product liability coverage. This could maximize coverage for the company and prevent major financial losses. Reviewing the policies and how much the company gets with the combination shows them why both policies are a must.

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Offsetting Financial Losses Because of Theft

Businesses such as retail stores could incur financial losses because of customer or worker-related theft. A supplemental policy helps the business owner offset these losses and prevent major disruptions in the company’s cash flow. Theft leads to incredible financial losses for a cannabis store.

Increasing preventative measures in the store helps the business owner lower their monthly premiums. This includes door sensors, alarms, and RFID chips for high-valued items. Installing these tools and using the sensors alert the workers if a customer tries to leave the property with merchandise. Enforced quality control policies help the business mitigate these risks, but the guidelines won’t solve the problem altogether. Security cameras and careful monitoring improve protection for their merchandise and lower risks, too. Stores that hire security personnel could also get savings on their monthly premiums by mitigating the theft risks.

Insurance for the Store

Commercial property coverage protects the owner against property damage and losses. The policy covers the property against fires, natural disasters, and criminal acts. The policy gives the owner funds to pay for structural repairs or replace the property if it is a total loss. The owner must file a claim as soon as they discover property damage. Some limitations could apply to water leaks, mold remediation, and other damage that has a discovery timeline. The policy protects items inside the property, but high-valued items may need a rider for extra coverage.

Insurance Coverage for the Crop

Cannabis growers who sell their products in the store need coverage for their crops. If the crop is damaged, the retailer loses money and their product. The coverage offers replacement profits if the crop is destroyed because of uncontrollable conditions. This includes adverse weather and natural disasters, mostly. However, if tools such as irrigation systems are damaged, the grower could get some replacement funds, but there could be limitations.

Director’s and Officer’s Insurance

Director’s and officer’s insurance provides help if the store is sued because of their products. With cannabis or CBD products, the effects of the products on consumers could cause an injury. They must test CBD products for their effects, and the manufacturer must ensure that there aren’t any dangerous side effects. The insurance provides funds to cover lawsuit settlements if a customer is injured while using the product.

Cargo Insurance for Transporting the Products

Cargo insurance protects the workers and the business owner when the products are transported to another business or if the store delivers their products. It covers the product and will provide coverage to replace it. This includes the cannabis, and any products related to using it.

Business owners who sell cannabis products need proper insurance to cover liabilities and their assets. The industry is still growing, and it could present a lucrative business opportunity, but the business owner needs adequate coverage for all their assets and situations that could arise while cultivating their product and selling it to consumers. Reviewing each policy shows the business owner how it could protect their cannabis business fully.