As many individuals have noted, the cannabis industry is rapidly growing, and cannabis-related businesses quickly become very profitable. However, cannabis companies often face serious emerging risks that other kinds of companies may not have to deal with due to the federal illegality of the products.

Over half of the states in the United States have legalized marijuana, and a limited number have approved recreational marijuana use for adults. These numbers continue to rise, which is the driving force behind the rapid expansion and success of the cannabis industry. With this growth, there are also several cannabis risk factors that very few companies in the insurance industry have taken into account.

When cannabis businesses are looking to mitigate the risks of their industry, they will need to find an insurance company that understands their risk management needs and can ensure the companies mitigate any cannabis risk they may face.

What Is Risk Management?

Risk management is a process where the biggest risks of a particular industry are first identified and evaluated. Then resources are allocated to make sure that the impact or probability of the risk occurring is minimized. It could mean the difference between a crop being wiped out and the cannabis business filing for bankruptcy and the crop being wiped out but insurance covering the loss.

The cannabis business is unique due to the federal illegality of marijuana and the applicable laws in the state in which you have your company. Risk management is a critical part of the cannabis insurance industry because these businesses have great risks but very little coverage. Other companies can easily get various types of insurance such as general liability, product liability, workers’ compensation insurance, and others to cover any potential losses or property damage.

If you are a business that grows, cultivates, transports, or sells cannabis and CBD products, it is integral that your company finds the right insurer for you. From employee theft to acts of God and everything in between, investing in the right insurance products will mitigate the risks of cannabis growth and sales.

What Role Does Risk Management Play in the Cannabis Industry?

The primary concern for the cannabis industry and risk management is that many standard risk management tools are not available to cannabis companies. For most companies, standard operating procedures include getting more than adequate insurance to cover their needs.

Marijuana businesses may be unable to obtain credit cards, bankruptcy law protection, banking services, federal patents, and more because of the federal laws against cannabis. Without these risk management tools, the company will always be at risk should an event occur.

Whether a consumer was injured after ingesting a cannabis product, the cargo was damaged in transit, or a crop was infected due to disease, the company would be responsible for covering those losses unless they have adequate insurance coverage.

How Do Cannabis Insurance Mitigate Risks for a Cannabis Business?

A cannabis insurance company that specializes in and only works with businesses in the industry will be able to provide that cannabis or CBD company with insurance coverage that mitigates any risk. Business owners who contact OG Cannabis Insurance will have peace of mind knowing that their crops, products, equipment, and employees are all covered.

Best practices in the business world dictate that insurance is essential, and that is why we specialize in the cannabis industry. At OG Cannabis Insurance, our team understands the legal need for general and product liability insurance coverage. We want to ensure that your quality products are safeguarded and minimize your risk.

Types of Risks Associated with the Cannabis Industry

As with any business that offers a product or service for consumers, various potential risks will be associated with it. For the cannabis industry, here are some of the most common types of risk that can be covered with the right amount of insurance coverage from insurers who understand the marijuana industry:

• General liability
• Property damage
• Workers’ compensation
• Business interruption
• Crop failure
• Transportation accidents
• Cybersecurity
• Employee theft
• General theft

Depending on the circumstances of the event, any of these insurance coverages listed above could protect your company from serious financial strain.

If an entire crop is infested with insects, you may lose those plants. Without insurance, that could be a devastating loss. Investing in the right insurance can be the difference between bankruptcy and continued business success.

One particularly difficult risk that cannabis businesses face is dealing with financial institutions when theft or fraud has occurred, especially since many companies are cash-only. Handling cash makes cannabis-related businesses vulnerable without the right security and risk management.

Most financial institutions like banks will not work with marijuana companies because of the potential for criminal prosecution. The SAFE banking act has removed all the risks from doing business with a bank, which means you can now safely store your money in one place and enjoy safe loans without worrying about it being taken away.

Contact Our Cannabis Insurance Agents

Investing in insurance for your company is crucial when operating any business that involves cannabis. The health and safety of your employees and customers and your company’s security could be at stake.

At OG Cannabis Insurance, our team has the experience, skills, and education needed to help your business get the security it needs and mitigate the risks that you face daily. With our connections to a host of qualified and specialized cannabis insurers, we can help you take control of your risks and ensure that they do not lead to financial ruin.

Contact OG Cannabis Insurance today at (877) 473-7979 to discuss your company’s insurance needs and get a free quote from a cannabis operations insurance specialist!