The Cannabis Industry is expanding – isn’t that great news?

Today, more and more Cannabis-related business are established – and that also means, there’s an increased need for insurance, that will insure the risks that comes associated with Cannabis-related business.

High risks and unpredictability goes hand in hand with Cannabis-related business – and on the other hand, despite the risks of the Cannabis industry, it’s getting more harder by the day to insure the industry, aided by the hard market of today, challenges of rules and regulations and add to that the carriers are opting to pull out of the tough parts of the business.

Agents and brokers can only tap into the Cannabis-related business with success for opportunities, if they have a level of expertise that goes far beyond the general commercial fields – this way, the brokers can also ensure their clients that they have the right coverage.

That means, brokers – and agents alike, need to understand a few challenges that may crop up when they approach Cannabis-related business for opportunities.


Hard to navigate

And rightfully so.

The structure of Cannabis-related business is very complex, what with its federal legalities and tax issues, and due to this, many Cannabis-related business’ owners has to establish unique business scenarios. These types of business often come loaded with multiple business entities and named insureds.


Lack of knowledge

It can be hard for agents and brokers – who are looking for opportunities to engage in the Cannabis industry – to find sources that understands the risks that comes associated with the Cannabis industry.

Many complexities are involved in the process of extraction of Cannabis – and thus, it becomes important to work with industry experts who have an idea of the risks and issues of these types of operations.


Still a very new industry

Despite its expansion, the Cannabis industry is very new – and thus, there’s only a few established risk management profiles in existence, and that too, only for a mere five to ten years.

This makes it hard to find a list of best practices from a viewpoint of insurance – also, from an industry that has been trying to set up its own rules and regulations for what the Cannabis industry should look like in the near future.

Needless to say, this has come as a challenge to the carriers and underwriters alike.


An exhausting process

In the Cannabis industry, the sales process can be exhausting – and that’s putting it in a mild way.

The products that the carriers have put on the market, they are much expensive as compared to the traditional insurance products. Business owners are not used to it – plus they are restrictive. This forces the brokers to work hard to keep the attention of the business owners, and not rely on the price alone.


Not all policies are equal

Even though Cannabis business insurance has taken a strong foothold in the Cannabis industry, however, there is still a pressing concern – how to secure coverage that best suits the needs of the specific Cannabis-related business.

The result – even though the Cannabis-related business’ obtain coverage, but they are fraught with loopholes; this leads the Cannabis-related business to face heavy risks such as theft, product liability, general liability, and this is only the tip of the iceberg.

And even though, brokers are trying their best to expand the profile of their coverages, but sadly, most of their time is taken trying to fix the gaps and limits in the insurance policy.

These challenges are enough to spread doubts in the minds of the agents and brokers – leading them to question – is there any way of how Cannabis insurance can be placed safely and securely?

There is.

There are a few best practices through which Cannabis insurance can be placed.


Opt for a knowledgeable wholesaler

A wholesaler is one who knows the ins and outs of the Cannabis industry – and that means they are also well aware of the standard policies and what they contain. This puts the wholesaler in a best position to make use of the coverage options – limited they may be – that are available.

For agents and brokers who are in the normal market, they will need a wholesaler if they want to break into the Cannabis industry – the wholesaler will help them to understand the coverages that the business owners will need to protect their Cannabis business.

And true, that the learning curve is steep, but with the right person at the right time, the agents and brokers will benefit a lot.


Know the business acumen of the Cannabis-related business owners

Ask around – and as an agent or broker, you will find many Cannabis-related business owners who have been in the industry for years – but surprisingly, have never bought any insurance policy.

And if as an agent or broker, you plan to sell insurance policy to them, the process will be complicated as it will require them to know of the necessary coverages.

However, on the other, if a traditional business owner, if they are aware of the insurance policy and has already purchased for their traditional business, it won’t be hard for the agent or broker to guide them if they plan to venture into Cannabis-related business.


Know what gaps and limits to look for

That’s true – for agents and brokers, to serve their clients properly with the right Cannabis insurance for their Cannabis-related business, it’s important to identify and recognize the potential gaps and limits in the Cannabis insurance policies.

  • There are many insurance policies that clearly exclude vaping-related products, while some don’t. Instead, what these insurance policies will do – they will specifically exclude vaping-products that are manufactured in foreign lands – and where most of the vaping products are made, unknown to agents and brokers.
  • On the other hand, there are insurance policies that remove the coverage for health-related claims that doesn’t come under trip and fall – this, however, minimize the quality of product liability coverage of Cannabis-related business.
  • The warehouses that employ security guards, or say, the misconduct of consumers or employees, this can result in costly liability claims. And if the limits are too low in the insurance policy, then, it won’t be long before the business declares bankruptcy.

The good news is that today, the agents and brokers are gaining more and more knowledge and they have already viewed the Cannabis industry as a viable profitable field, and are more than willing to enter and expand their portfolio in the near future.