Recreational cannabis was legalized in late 2018, but even two years down the road, the specific rules and regulations surrounding the production and sale of cannabis can cause some confusion for those breaking into the business.
Insurance needs for producers and retailers are fairly specific, and because legalization is still fairly new, insurers are more concerned with potential risks. If you’re planning on starting up your own budding cannabis business and becoming a licensed producer, it’s important to work with an insurance broker experienced in securing cannabis insurance. There are some major differences between typical commercial insurance and insurance for cannabis businesses, and it’s important to be informed about them to avoid any repercussions or gaps in coverage.
Commercial Cannabis Insurance in Canada
As for any business in Alberta, commercial insurance occurs on a case-by-case basis. There is no one-size-fits-all when it comes to business, and that means that different coverage and regulations are necessary for every business. This is especially true when it comes to the various types of businesses working with cannabis, from producers and growers to retailers and transportation companies.
There are four main types of insurance available for cannabis:
- Cannabis retailers insurance
- Cannabis distributors insurance
- Cannabis growth facility insurance
- Cannabis manufacturers/producers insurance
Even after you have the correct type of policy for your business, your insurance won’t exactly match the insurance of a competing cannabis business, and that’s fine. As long as you’ve discussed the specifics of your business with a qualified insurance broker in Edmonton, you’ll be able to secure coverage that fits your business perfectly.
What Does Cannabis Insurance Cover?
Like any type of commercial insurance, a cannabis-specific insurance policy will cover all of the basic necessities for a Canadian business. However, every business is different. That means there is no single ‘cookie-cutter’ insurance solution that suits every business. Ultimately, it’s up to you and your broker to discuss exactly what your insurance covers.
As far as cannabis insurance goes, risk management and loss control is the key to a successful policy. One of the major risks that comes with being in the cannabis industry is unexpected environmental threats. Factors that you have no control over can be heavily destructive for your business, whether it’s a natural disaster or an infestation. However, there are options to protect against these incidents. For example, issues like the unintentional contamination of your cannabis products can be covered under your insurance.
Some of the greatest risks insurers will consider when writing policies for a cannabis producer or retailer include:
- The heightened risk of fire
- Spoilage risks, such as infestations
- The considerable value of cannabis products
Due to the value of the products, there is also a significant risk posed by the threat of physical attacks like theft or vandalism. If your business is the victim of either of these, it’s important to have a well-rounded insurance policy to cover losses, repairs, loss of income, and other potential expenses.
Transportation for cannabis products opens up the potential for additional risks. Cargo and transport coverage is available to protect your business when transporting cannabis.
Liability for Cannabis Businesses
As with most Canadian business insurance, commercial cannabis insurance includes coverage for product liability. This can ensure that your business is protected if products are misused, mislabelled, or if the product unintentionally causes harm.
With the growing use of technology in every industry, cannabis businesses may also want to consider cyber liability coverage. The personal information of your clients, as well as confidential information for your business, is at risk thanks to malware, ransomware, and other forms of cyberattacks. In case a cyber-related incident does occur, cyber liability coverage will be able to cover the damage.
Managing Risks in Your Business
Commercial insurance policies are an essential component of a business continuity plan. If an incident occurs and you don’t have the proper insurance, the repercussions could be destructive. However, there are plenty of other components of risk management and business continuity plans, many of which can prevent the need to file a claim at all.
What does risk management look like in the cannabis industry? Once again, it depends on the business, but there are some factors every business needs to keep in mind, including building security, online security, and risks brought about by human error.
Staff training is one of the most critical preventative actions you can take to ensure all of your employees understand the risks in the business, as well as how to recognize and reduce them. Educate yourself and your team on the safety features of your building, such as the sprinkler system and fire alarm. It’s also a good idea to hold a seminar on cybersecurity, as a simple mistake could lead to a major loss of data and personal information.
Staff training should be done annually, or however often you deem necessary for your business, to ensure that staff members (both new and experienced) are up to date on the industry best practices.
Commercial Insurance Solutions from Local Brokers
The world of commercial insurance is complex, and navigating it can be intimidating for new business owners. In the cannabis industry, insurance can be even more complicated thanks to the additional rules in place for the production and selling of cannabis. That’s why it’s so important to work with an insurance brokerage with experience in commercial insurance, and more specifically, cannabis insurance.
At Cornerstone Insurance Brokers in Edmonton, we’re fully dedicated to ensuring your commercial insurance has everything you need, so you can focus on growing and improving your business.
Have questions about our commercial insurance in Edmonton or want to discuss your coverage options? Get in touch with us, or reach out now to receive your insurance quote today!
