It is no secret that the cannabis industry has a lot of associated risks that business owners need to be able to preempt and take the necessary steps to protect themselves from. There are different types of risks that should be evaluated in order to ensure your business thrives. Here are a few types of risk and how you can protect your business from them.
A cannabis business is not much different than any other business when it comes to operation risk– Liability insurance (also known as Commercial General Business Liability) protects a company’s assets and pays for obligations – medical costs, for example –incurred if someone gets hurt on your property or when there are property damages or injuries caused by you or your employees and is a good starting point for insurance for any business (not just cannabis business).
Legal and Statutory Risks
These are the most common risks that your cannabis business can be exposed to. There are numerous rules and regulations that guide the conduct of business in the industry. It does not help that each state in the country has their own specific laws too. Therefore, it goes without saying that you should be interested in protecting your business from these risks. A good way to do this is to seek for help from professionals who understand the industry and will be able to provide solutions that best suit your business. You can hire compliance officers to help you manage these risks. They will also handle the policies of your company more efficiently especially because they have the needed knowledge and they will also be able to look at your company’s situation from an objective perspective, thereby ensuring that there are no oversights due to any form of bias.
These involves risks due to contracts that may include local zoning laws, land ownership disputes and these risks are also common. Contracts usually contain a lot of complicated legal jargon that can be properly interpreted by a competent legal counsel. It is best that you seek extra help from a local licensed attorney even though it may be expensive. However, you should view it as an investment that will be beneficial in the long run. Additionally, an attorney will be able to help you write your risk management policies and they will also scrutinize every contract to ensure that the interest of your company is protected at all times. They will also help you establish the standard operating procedures with respect to the content of the contract, access to the contract, authority to modify contract and of course, termination of contract.
The public’s perception of your company is as important as what your company does, or even more important in some situations. In today’s world, the power of social media should not be underestimated especially because any corporate decision, actions or decisions can become public knowledge within minutes. It is therefore important that companies strive to maintain a good public image and avoid any risks posed by a bad reputation. It is advisable that you enforce strong corporate values and ensure that your employees believe and adopt them as well. In addition, it is important that you scrutinize every step of your production and supply chain for possible risks to your reputation and formulate strategies that will be used to eliminate or reduce them.
This is one of the most important risks that a cannabis business will have to deal with. The provisions of the law regarding product liability varies from state to state, but the implications are generally the same thing. The law holds the producers, retailers and distributors accountable for any product liability. It cites strict liability, oversight, implied or express warranties and falsification or misrepresentation of concepts. This is a huge cause for concern among retailers and it results in them mounting pressure on the producers to improve on and maintain the quality of their products. Product liability is quite expensive and it is estimated that damage awards could be up to $350,000. This liability is most important for products that are ingested like edible products. The good news is that there are several ways by which you can reduce the risks of product liability.
Documentation is one of the most important steps in ensuring your business has complete protection from the risks posed by product liability. With proper documentation, you can prove that your company followed all the good quality production guidelines, in the case of a lawsuit or even for inspections. Ensure that you have proper batch identification and also have informative labels on every product, bearing all the necessary information which include content, strength, date of manufacture, batch number, directions for use, storage advice and expiration date. It should also contain warnings where necessary and they should be clearly spelt out in a way that they can be easily understood. Proper documentation makes it easier to track a product in case of any problems down the line.
Take advantage of the product life cycle
Every product has a life cycle that has different stages which include pre-production, production, and post-production. When each of these stages are treated individually, it is a whole lot easier to figure out the different possible risks at each stage and how best to prevent them. It also makes it easier to improve on the quality of the product. This can be achieved by ensuring the design is flawless, the process is controlled and the products pass proper inspection tests before being released for consumption. Every step of the production process is subjected to routine inspections to ensure the final product meets all quality requirements.
It is advisable that every batch of your product should be inspected by a third party with no ties to your company that may result in bias. The aim of the testing is to ascertain the quality of the product and to ensure that the product is wholesome and free of contaminants and unwanted ingredients. After the results of the test have been obtained, it is also recommended that the test facility keep small samples of each tested batch for three months as “controlled” samples.
There are several other tips that would be helpful in protecting your business from the risks due to product liability. Your insurance provider will be able to provide more information. However, here are a few extra tips to help protect your business: Use a batch number for products in order to easily identify a lot that needs to be recalled
- Use packaging that prevents tampering and preserves the quality of the product.
- Make use of an efficient system that can capture patient information, product testing, and sample recall.
- Ensure your retailers and vendors have their own insurance cover
In conclusion, the cannabis industry has a lot of risks, but by taking the necessary steps, you can preempt the risks and protect your business. With the right information and by securing experienced and professional help, your business will be better off for it in the long run.
Get a cannabis insurance quote today on 420Property.com