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What to Know About Changes in Cannabis Insurance

December 26, 2021/in Cannabis, High-Risk Insurance /by Amanda Rogers

The cannabis industry continues to grow every day. With this, comes a new space for industry coverage. In this article, we’ll discuss changes in cannabis insurance; including how the industry has evolved, cannabis business insurance challenges, and how to insure your high-risk business properly. Let’s dive in.

How Has the Cannabis Industry Evolved?

As we previously mentioned, the public’s reaction to cannabis has shifted time and time again throughout history. Even just ten years ago, one might’ve laughed if you told them that in 2020, cannabis sales would hit an all-time record of $17.5 billion. In fact, from just 2019 to 2020, the industry experienced a 46% increase in sales, according to Forbes.

To put things in perspective, according to PropertyCasualty360, cannabis sales may reach up to $37 billion by 2024, which means “the U.S. legal cannabis market would still outpace annual craft beer sales and generate more revenue than toothpaste, hard seltzer, and the NBA combined.”

The decision of many U.S. states to have made cannabis legal today is still controversial on some level. 

While many people turned their noses up at cannabis being made legal, it’s interesting to remember that the drug actually “enjoyed a 5000 year history as a therapeutic agent across many cultures,” until the Marijuana Tax Act of 1937, which prohibited its use and sale.

The cannabis industry continues to evolve every day. 

With the now booming cannabis market, comes a new space for industry coverage. There are unique cannabis business challenges, which we will discuss below. If you’re interested, however, in the difference between cannabis and hemp insurance, read on here.

Cannabis Insurance

Challenges with Cannabis Insurance

One particular challenge of the emerging cannabis industry is properly insuring your cannabis business. According to Yahoo Finance, cannabis insurance “help[s] strengthen and legitimize marijuana-focused businesses. It protects them against:

  • Crime
  • Vandalism
  • Property damage
  • Other unfortunate events”

Insurance is essential to protecting any cannabis company as it minimizes liability and risk exposure. But that doesn’t mean it’s easy to find the right coverage.

“The good news is the cannabis insurance industry has come a long way in a short time,” says Ian Stewart, founder and chair of the national cannabis and hemp law practice at Wilson Elser.

“These days it is not so much about whether companies can obtain coverage, but more about what lines are available and the limits,” says Stewart. “The variety of insurance vehicles is expanding.”

These varieties include:

  • Property and casualty lines
  • General commercial insurance
  • Product liability

As the cannabis industry continues to grow, we gain a better understanding of how it works and it’s loss history.

More difficult coverage types to write for cannabis businesses, according to Stewart, include:

  • Employment
  • Cyber,
  • Errors and Omissions (E&O) policies
  • Specialty lines (i.e. crop coverage)
  • Auto policies (for companies who deliver cannabis products)

How to Insure Your Cannabis Business

Cannabis insurance falls into the realm of high-risk insurance. According to PropertyCasualty360, “insurers that provide coverage to cannabis businesses engaged specifically in selling marijuana can be criminally liable for aiding and abetting in the sale of marijuana or conspiring to violate the CSA — even when the business’s activity is legal under state law. Further, intrastate issues may also cause complications if marijuana is not regulated uniformly within a state.”

For these reasons, it can be more difficult to find proper coverage.


Legal cannabis companies require specific cannabis insurance expertise. Since the industry is still blooming, there are not as many experts as one would yet hope for.

The most important part of insuring your cannabis business is working with a knowledgeable insurance provider, one who understands the specific needs of your high-risk business. 

Depending on whether you’re a dispensary, cannabis manufacturer, cultivator, delivery business, physician, or so on, all of these branches face a different set of challenges, which, in turn, require different cannabis insurance policies.

These insurance policies, according to Embroker, might include:

  • General Liability
  • Product Liability
  • Commercial Property
  • Workers Compensation
  • Business Income Coverage
  • Cyber Liability
  • Errors & Omissions and Technology E&O
  • Crop Coverage
  • Commercial Auto
  • Cargo and Inland Marine
  • Loss of Income
  • The list goes on!

The steps to insuring your cannabis business can seem daunting. That’s why we recommend you enlist a trusted expert who has experience insuring this high-risk industry. This way, you can partner with someone who understands the specific needs of your cannabis business to create an effective risk management strategy.
Contact Brenda Jo and her team at Competitive Edge to learn more.

https://compedgeins.com/wp-content/uploads/2021/11/What-to-Know-About-Changes-in-Cannabis-Insurance.png 628 1200 Amanda Rogers https://compedgeins.com/wp-content/uploads/2020/11/logoweb.png Amanda Rogers2021-12-26 07:00:002021-11-30 14:40:27What to Know About Changes in Cannabis Insurance

Cannabis Insurance: Risks and Coverage

August 22, 2021/in Cannabis, Health & Wellness, High-Risk Insurance, News /by becca

The emerging cannabis market has created a new space for industry coverage. There are, however, both general and unique risks of cannabis insurance that shouldn’t be overlooked.

Let’s talk about the risks of cannabis insurance and what coverage is available to keep your business protected.

Risks of Cannabis Insurance

Claims can vary, but some of the most common in the cannabis industry include:

  • Bodily injury or property damage caused by a product misuse
  • Product-related/manufacturing defects that result in some kind of loss
  • Inhaled, edible, and infused products that may have caused illness
  • Faulty/misused equipment (which includes vape cartridges, batteries, and lighters)
  • Marketing/labeling misrepresentations

Moreover, The National Association of Insurance (NAIC) acknowledges that companies might need to reevaluate their coverage when it comes to cannabis and hemp. With the rising popularity of different forms of cannabis (for example, edibles), there are mental effects that need to be accounted for with insurance risk.

NAIC claims that products like edibles “increase the risk of product liability and safety recalls. The psychoactive effects of CBD raise the risk that products may be deemed mislabeled, misrepresented, or harmful.”

Research shows that young people have shown more interest in illicit drug use in recent years, which could change the insurance services and risks available.

Some additional and unique risks associated with cannabis coverage to consider include:

  • Cannabis businesses are complex
  • The market is constantly changing
  • Policies are not on the same playing field
  • Vaping products muddle the market

What Insurance Does Your Cannabis Business Need?

So, what insurance does your cannabis need to combat these risks? Below are three of the best ways to protect your cannabis business.

  1. Product Liability Insurance

Cannabis and CBD products require custom product liability policies for their:

  • Manufacturers
  • Retailers
  • Distributors
  • Cultivation
  • Facilities
  • And more

This coverage applies to any business bringing a product to market. If an incident were to occur, these custom product liability policies kick in to help defend your company against claims and allegations and to pay damages if your business is found liable.

Considering the potential claims that can be made against your business (listed under “Risks of Cannabis Insurance”), product liability insurance is an essential part of your cannabis coverage.

  1. Product Recall Insurance

Similarly, you may want to consider product recall insurance, which can cover the costs of removing a defective product from the market and further prevent third-party claims.

  1. Employment Practices Liability Insurance (EPLI)

Lastly, your cannabis business might consider EPLI.

Employment Practices Liability Insurance (EPLI) is insurance that provides coverage to employers against claims made by employees.

EPLI policies typically extend coverage to the following:

  • Wrongful Termination
  • Sexual Harassment
  • Wage-Related Claims
  • Claims of Unequal or Unfair Pay
  • Discrimination Claims (i.e. age, race, gender, sexual orientation)
  • Third-Party Claims
  • And more

According to Amtrust Financial, the below are also common employer missteps that may be covered:

  • Failure to Hire or Promote
  • Libel, Slander, Defamation of Character, or Invasion of Privacy
  • Wrongful Infliction of Emotional Distress
  • Wrongful Discipline or Demotion

Who Needs EPLI?

The fact of the matter is that some industries are more susceptible to these types of claims than others. Highly susceptible industries include the cannabis industry as well as healthcare, professional services, restaurant, food services, retail, and manufacturing.

Again, EPLI claims can be detrimental to businesses of all sizes and types. This policy helps protect against many kinds of employee lawsuits which is why it’s important to invest in coverage, especially for a client-facing business such as cannabis.

A Final Word

Naturally, carriers have their own best interests at heart and only cover the safest bets to protect themselves. At Competitive Edge Insurance, we build your case with the carrier to ensure that you get the right coverage at the best price based on your real-world conditions.

Read on if you’re wondering the difference between cannabis and hemp insurance, then get in touch with our team today.

https://compedgeins.com/wp-content/uploads/2021/07/iStock-1253178061.jpg 1235 2426 becca https://compedgeins.com/wp-content/uploads/2020/11/logoweb.png becca2021-08-22 16:55:002022-03-30 15:47:37Cannabis Insurance: Risks and Coverage

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