What is cannabis insurance?

The legalization of medical and recreational marijuana in Vermont has created numerous new business opportunities. With new opportunities come new risks, though. Cannabis insurance may help businesses in the cannabis industry protect themselves from the common and less-common risks they face.

Cannabis insurance offers tailor-made coverage for businesses in the cannabis and marijuana industry. Policies may cover a range of property and liability perils.

What businesses in Vermont is marijuana insurance for?

Vermont businesses in the cannabis industry normally need insurance, and marijuana insurance tends to be the right choice for most. This can insure a wide variety of businesses in the industry. For example, policies may be purchased by:

• Hydroponic and traditional cultivators
• Tincture and oil extractors
• Official cannabis dispensaries
• Local CBD retailers
• Edibles manufacturers
• Distributors and wholesalers

Although all of these businesses typically need some form of marijuana insurance, each business has specific needs that call for specialized coverages. An insurance agent who knows cannabis policies well can help businesses select a policy that matches their particular coverage needs well. 

What insurance protections should cannabis businesses look for?

Most of the coverages that cannabis businesses need are either liability projections or property protections. The former primarily protect against situations where a business could be held financially liable for injury or property damage. The latter mainly protect buildings, inventory and other assets that a business has.

Some examples of liability coverages that businesses in the cannabis and marijuana industry might want are:

• General Liability Coverage: Might insure against basic “slip and fall” accidents that occur at a business’s location, and result in injuries to a customer, vendor or other non-employee.
• Product Liability Coverage: Might insure against illnesses and injuries caused by products that a retailer or wholesaler sells, or that a manufacturer makes. This coverage is often restricted to non-cannabis products.
• Cannabis-Infused Product Coverage: Might insure against illnesses and injuries caused by products, much like product liability coverage. The cannabis-infused version often specifically covers cannabis products.
• Professional Liability Coverage: Might insure against illnesses and injuries that customers sustain because of bad advice that an employee gave, or a wrong statement that they made.
• Cyber Liability Coverage: Might insure against data breaches resulting from ransomware attacks, online hacking attempts, or similar instances.

Many of these liability coverages also protect against property damage, but protection in the case of illness or injury is typically more important to cannabis businesses.

Some property coverages that may be important for a cannabis business to have are:

• Commercial Property Coverage: Could cover owned buildings, equipment, fixtures and products not containing cannabis. Often also covers products containing cannabis when included within a cannabis policy.
• Medical Cannabis Coverage: Could cover medical marijuana products that a dispensary or other business has in inventory.
• Business Income Coverage: Could cover extended periods of lost revenue, when caused by certain disasters that force a cannabis business to temporarily cease operations.
• Vehicle and Equipment Coverage: Could cover vehicles that a cannabis business owns, protecting against damage and accidents. This might also cover non-auto equipment, depending on the policy.

How can segmented cannabis businesses best insure themselves?

Insuring a segmented cannabis business often requires getting a separate policy for each distinct entity. It’s important to make sure the chosen policies provide all desired coverages, but also to avoid creating duplicate coverages that aren’t needed.

Businesses in this type of situation should work closely with an insurance agent who specializes in marijuana insurance. A specialized agent will be familiar with the different risks that each part of a segmented cannabis business likely faces, and be able to assist in selecting the right types of policies and coverages.