Cannabis and Hemp Industry Insurance

Every business needs insurance that protects them from liability and financial loss. Cannabis and hemp insurance policies focus on the needs of companies operating in this unique industry. Many insurers offer a variety of cannabis and hemp insurance products designed to meet each business’s specific needs. Anyone interested in starting or expanding a business in the cannabis and hemp industries should spend some time learning about and comparing their insurance options.

Cultivators rely on healthy crops that they can sell to dispensaries or manufacturers. Unfortunately, no one can control all the factors that affect cultivation. Outdoor farms can fail from drought or flood. Indoor cultivators can get infested by harmful insects. Cannabis and hemp insurance for cultivators should offer crop protection that pays for damaged or diseased plants. Policies should also provide liability coverage that protects the property owner from responsibility when someone gets injured while working at or visiting the location.

Cannabis dispensaries face a wide range of potential problems that could prevent them from succeeding. Cannabis and hemp insurance for dispensaries may include coverage for theft, burglary, and vandalism. The policies may also offer coverage for disasters, including fires, floods, earthquakes, electrical outages, and equipment malfunctions. Successful dispensaries also need significant protection from liability. With so many people entering the storefront, there’s a higher possibility that someone could get hurt on the property. Liability coverage protects the property owner from the financial impact of injury.

Cannabis and hemp manufacturers usually specialize in making products for consumers. For example, a company might use extractors to separate CBD from hemp. The CBD gets turned into an oil, edible or other product that consumers want to purchase. Cannabis and hemp insurance policies for manufacturers should cover equipment malfunction. Even small extractors cost thousands of dollars, so businesses need to protect themselves from equipment that they cannot afford to repair or replace.

Skyfront Insurance provides custom tailored insurance solutions for cannabis and hemp businesses of all types. Our philosophy is insurance should provide adequate coverage for business risks, as well be affordable and attainable for those cannabis and hemp industry. As a leading cannabis insurance provider, we can help identify enterprise risks, assess gaps in current coverage, and obtain insurance solutions tailored to your business needs.

Skyfront Insurance Services is committed to playing a critical role in the growth of the cannabis and hemp industries. While insurance is an important aspect of protecting and growing your businesses, several other resources are required to successfully navigate the cannabis industry. The most common resources our clients need are credible sources of capital, legal services, testing partners, HR & payroll services, accountants, compliance resources and even marketing and branding assistance.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

Who We Cover

  • Ancillary Cannabis Businesses
  • Hemp Farmers
  • Cannabis & Hemp Cultivators (Indoor, Outdoor, and Greenhouse)
  • Cannabis & Hemp Landlords
  • Medical Dispensaries
  • Recreational Dispensaries
  • Cannabis Physicians
  • Cannabis, Hemp, & CBD Product Manufacturers
  • Cannabis & Hemp Events
  • Cannabis Commercial Kitchens/ Edible Producers
  • Extraction Laboratories/ Concentrate Manufacturers
  • Delivery Services
  • Wholesale and Distributes
  • Transportation and Logistics Companies
  • Laboratories and Testing Facilities

Products

  • General Liability
    • $2M Occurrence/$2M Aggregate
    • Pesticide and Herbicide Applicators Endorsement
  • Property and Casualty
    • Up to$10M Property Limits Per Location
    • Landlord coverage
  • Crop Coverage
    • Up to $10M Living Plants
  • Excess Liability
  • Product Liability
  • Equipment Breakdown
    • Loss of Business Income
  • Auto (Primary/Excess)
  • Workers Compensation
  • Professional Liability
  • Crime and Employee Dishonesty
  • Miscellaneous & Manuscript
  • Directors and Officers Coverage

Other Services

  • Industry Consulting
  • Policy Review
  • Risk Management Coverage Analysis
  • Will Serve Letters

Insurance Quote Request

Cannabis & Hemp Property Insurance

As more states legalize medical cannabis, recreational cannabis, and hemp, companies involved in the industry need to find real estate and property insurance options that protect them from things like fire, theft, vandalism, and floods.

Since the federal government hasn’t legalized cannabis, yet, businesses in some states may find it difficult to find the property insurance that they need to protect their companies. The industry, however, is changing quickly. That means that existing and new companies have more options than ever.

Recent Changes in Cannabis and Hemp Property Insurance

Any opportunity to increase revenues will temp some insurance companies to work with the cannabis and hemp industries. In fact, dozens of companies already offer a variety of insurance options for growers and retail stores. Overall, though, the industry still struggles to find legitimate coverage for locations around the country.

Recent changes within state and federal governments, however, are making it easier for insurance companies to offer property insurance to hemp and cannabis businesses.

Since the beginning of 2017, Dave Jones, California’s Insurance Commissioner, has talked about reforming the insurance industry so providers can work with the cannabis industry more easily. In 2018, Commissioner Jones approved a policy that would improve the insurance options available for cannabis dispensaries, processors, storage warehouses, and growing operations.

Hopefully, the changes made by Commissioner Jones in California will lead to improvements in other states that have legalized cannabis for medicinal or recreational consumption.

The hemp industry got a huge boost when Congress passed the Hemp Farming Act of 2018. Prior to the act, the federal government considered it illegal to grow hemp. Some states started pilot programs for farmers that wanted to test the market for a new cash crop, but those states only gave a small number of licenses to farms.

The Hemp Farming Act of 2018 makes it legal for farmers to raise hemp throughout the country, which should put more insurance companies at ease.

Finding a Commercial Insurance Policy for Your Business

Several factors can influence the type of commercial insurance policy that your business needs.

Dispensaries and farms, for instance, need different types of coverage. A dispensary’s policy will need to cover things like property damage, theft, and liability when someone gets injured in the store. A farm or grow operation, however, should have a policy that protects it from insect damage, floods, droughts, crop diseases, and destructive weather.

When exploring options, make sure insurance providers know whether you own or rent:

  • Retail space for selling cannabis products.
  • Farmland for growing hemp or marijuana.
  • Indoor commercial facilities for growing hemp or marijuana.
  • Storage facilities for storing products and cash.

Insurance for Indoor and Outdoor Growers

Whether you grow hemp or marijuana will also affect the type of policy that you get. Now that the federal government is on the cusp of legalizing hemp production, farmers should have access to more insurance options.

Farmers that grow marijuana containing THC, however, will still face many of the same difficulties that have plagued the industry for years. California’s new policy signals a positive change in thinking, but it’s impossible to tell how long it will take for other states to adopt similar regulations.

Regardless, all growers should consider adding crop insurance to their property insurance policies. You can make a lot of money by growing cannabis. An infestation of spider mites or aphids, however, could ruin your crop. Crop insurance protects you from that financial loss.

Policies For Owned and Leased Retail or Dispensary Spaces

The type of insurance policy that you get is even influenced by whether you own or lease your property. If you rent your farm or retail space, then you probably need commercial renter’s insurance that covers destruction of your merchandise. For instance, if a flood destroys the marijuana that you have in stock, then the policy should pay to replace the cannabis.

If you own the property, then you probably need a more comprehensive policy that covers liability, property destruction and damage, office equipment, business records, and the cost of rebuilding structures.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

Insurance Quote Request

Cannabis & Hemp Property Insurance

As more states legalize medical cannabis, recreational cannabis, and hemp, companies involved in the industry need to find real estate and property insurance options that protect them from things like fire, theft, vandalism, and floods.

Since the federal government hasn’t legalized cannabis, yet, businesses in some states may find it difficult to find the property insurance that they need to protect their companies. The industry, however, is changing quickly. That means that existing and new companies have more options than ever.

Recent Changes in Cannabis and Hemp Property Insurance

Any opportunity to increase revenues will temp some insurance companies to work with the cannabis and hemp industries. In fact, dozens of companies already offer a variety of insurance options for growers and retail stores. Overall, though, the industry still struggles to find legitimate coverage for locations around the country.

Recent changes within state and federal governments, however, are making it easier for insurance companies to offer property insurance to hemp and cannabis businesses.

Since the beginning of 2017, Dave Jones, California’s Insurance Commissioner, has talked about reforming the insurance industry so providers can work with the cannabis industry more easily. In 2018, Commissioner Jones approved a policy that would improve the insurance options available for cannabis dispensaries, processors, storage warehouses, and growing operations.

Hopefully, the changes made by Commissioner Jones in California will lead to improvements in other states that have legalized cannabis for medicinal or recreational consumption.

The hemp industry got a huge boost when Congress passed the Hemp Farming Act of 2018. Prior to the act, the federal government considered it illegal to grow hemp. Some states started pilot programs for farmers that wanted to test the market for a new cash crop, but those states only gave a small number of licenses to farms.

The Hemp Farming Act of 2018 makes it legal for farmers to raise hemp throughout the country, which should put more insurance companies at ease.

Finding a Commercial Insurance Policy for Your Business

Several factors can influence the type of commercial insurance policy that your business needs.

Dispensaries and farms, for instance, need different types of coverage. A dispensary’s policy will need to cover things like property damage, theft, and liability when someone gets injured in the store. A farm or grow operation, however, should have a policy that protects it from insect damage, floods, droughts, crop diseases, and destructive weather.

When exploring options, make sure insurance providers know whether you own or rent:

  • Retail space for selling cannabis products.
  • Farmland for growing hemp or marijuana.
  • Indoor commercial facilities for growing hemp or marijuana.
  • Storage facilities for storing products and cash.

Insurance for Indoor and Outdoor Growers

Whether you grow hemp or marijuana will also affect the type of policy that you get. Now that the federal government is on the cusp of legalizing hemp production, farmers should have access to more insurance options.

Farmers that grow marijuana containing THC, however, will still face many of the same difficulties that have plagued the industry for years. California’s new policy signals a positive change in thinking, but it’s impossible to tell how long it will take for other states to adopt similar regulations.

Regardless, all growers should consider adding crop insurance to their property insurance policies. You can make a lot of money by growing cannabis. An infestation of spider mites or aphids, however, could ruin your crop. Crop insurance protects you from that financial loss.

Policies For Owned and Leased Retail or Dispensary Spaces

The type of insurance policy that you get is even influenced by whether you own or lease your property. If you rent your farm or retail space, then you probably need commercial renter’s insurance that covers destruction of your merchandise. For instance, if a flood destroys the marijuana that you have in stock, then the policy should pay to replace the cannabis.

If you own the property, then you probably need a more comprehensive policy that covers liability, property destruction and damage, office equipment, business records, and the cost of rebuilding structures.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

Insurance Quote Request

Cannabis & Hemp Crop Insurance

Any agricultural crop is at the mercy of the elements. Flooding, drought, disease, and pests can destroy entire fields of corn and soybeans, sometimes financially wiping out the producer. For indoor crops, faulty lighting electrical outages can cause serious losses. Those in the cannabis and hemp industry need access to the kind of crop insurance coverage that traditional farmers have, but due to their crops confusing legal status, they have more difficulty in acquiring the coverage that they need. Since the these industries have expanded in recent years, the insurance questions have become more urgent. Without complete insurance options, the cannabis market faces increased risks that may discourage others from entering the market.

Crop Insurance Basics

Crop insurance is a necessity in the agricultural industry because farmers are always at the mercy of the weather and other uncontrollable elements. Although the premiums for these policies are usually substantial, they are worth the investment. Otherwise, just one severe storm can wipe out a year’s efforts and even shut down the operation permanently.

Many agricultural producers choose multiple peril crop insurance, also known as (MPCI). These policies can only be purchased before producers plant because they cover many types of natural disasters, including freezing temperatures, disease, drought and flooding. Some farmers choose to take their chances each year, but that approach is becoming more untenable, particularly due to the extreme weather patterns of recent years.

Some of these policies also protect growers against market fluctuations, so if the price for a particular crop drops dramatically during the season, due to overproduction for instance, the grower will still see a profit from their efforts.

Farming success is never a sure thing, but crop insurance serves to minimize the financial risks. Traditional farmers get help from the government in this area. The federal government authorizes 15 private companies to offer crop insurance and also subsidizes the premiums paid by these farmers to further reduce their financial exposure. Unfortunately, hemp and cannabis farmers do not have the same government safeguards.

Crop Insurance and Cannabis

In 2017, wildfires wiped out a number of crops in California, and while wine country was protected by crop insurance, cannabis and hemp farmers were simply out of luck, with many sustaining catastrophic losses. Natural disaster losses are an ongoing problem for outdoor producers, but those who raise their crops indoors also suffer losses due to fires, disease and other dangers. While these farmers run the same risks as other agricultural producers, they do not have access to the same level of insurance protection, largely due to federal law.

Legal cannabis growers can purchase crop insurance from private insurers, but they are ineligible for the government program since federal law still prohibits the production, purchase and use of marijuana. Of course, a number of states have legalized cannabis for medical use, and some now allow it for recreational purposes as well. This contradiction between federal and state law still adds difficulty to growing and selling cannabis. However, purchasing this insurance, along with acquiring liability insurance, is an essential step toward protecting farmers’ business interests.

Crop Insurance for Hemp Growers

The 2018 Farm Bill contains a provision for the federal legalization of hemp, which would allow hemp farmers to get crop insurance through the government program. As of mid-October 2018, a final vote had not been taken on the bill, but hemp farmers had reason to be optimistic. Until the bill’s passage and new policies are implemented, however, hemp farmers still must depend on a purely private insurance market for crop coverage.

Crop Insurance Availability

The number of insurers for the hemp and cannabis markets are growing, although many big name companies still are refusing to carry these policies. The legal issues as well as negative public perception dampen the enthusiasm of certain carriers. Overall, the number of companies will to carry these policies is rising, although they do not benefit from a partnership with the US government, the way carriers of traditional crop insurance do.

Those producers in the industry need to find cannabis-friendly insurance companies and properly cover their crops the way that farmers do their soybeans, wheat or corn. Otherwise, their business is simply too exposed to major losses from natural disasters and some man-made ones.

Insuring cannabis and hemp crops is getting easier, and producers hope that federal law will finally change soon. Until then, those in the marijuana and hemp industry need to seek complete business insurance coverage from private specialty companies. Crop insurance should be at the top of that list. As recent natural disasters in Florida and California have shown, cannabis crops can be wiped out in a few hours time. With no insurance, farmers risk losing everything. Acquiring private insurance when possible is the only sensible course for industry producers.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

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Cannabis & Hemp Product Liability Insurance

Product Liability Insurance is a common and well-known necessity for many entrepreneurs. For business owners in the cannabis and hemp products industries, this coverage takes on added significance. While not exactly a new product, cannabis and hemp as legal product offerings are still in their infancy. Predicting how consumers will react to problems, issues and negative experiences with these products is tricky. But, the history of products liability law and its hundreds of thousands of lawsuits and class action suits offers some insight.

Defective Products Law Overview

This area of law covers the damage that consumers experience due to the use of pharmaceuticals, machines, tools, food items and other products. Manufacturers and professionals in the supply chain are legally responsible for providing safe products. There are three main areas of exposure in these claims:

  • Design Defects: The product is manufactured as designed, but a flaw in that initial design causes harm.
  • Manufacturing Defects: The design may be sound, but something goes wrong in the manufacturing or fabrication process that results in a faulty product and these mistakes lead to illness or injury.
  • Failure to Warn/Marketing Defects: Labeling, warnings and instructions are often necessary to ensure safe use of a product. When the warnings are absent, insufficient, or misleading and injury or harm is the result, a defective products claim may be warranted.

In many cases, a combination of two or all three of these theories of liability may be indicated in a defective products claim. Ensuing litigation can ruin a business.

Where Will the Focus Be for Cannabis and Hemp Defective Products Claims?

The cannabis and hemp industries produce and sell products and they are subject to products liability law. Different industries apply differing protections, rules, and regulations to protect consumers from defects. Many professionals presume that the cannabis and hemp industries compare most closely to the alcohol and tobacco industry in defective product claims. But others argue that the area these entrepreneurs should be following more closely is pharmaceuticals.

Only time will tell which legal scenario plays out. But one thing is certain, products liability attorneys will chase the money. They are most likely to build these types of claims following the path that sees the most return.

Potential Risks

Colorado cannabis product recall made waves in the industry late in 2015 due to the use of banned pesticides in cannabis-infused edibles. It was a huge recall, but not an isolated event. The use of pesticides on products that are designed to be ingested leaves the industry open to product liability risks, potentially under all three defective products theories of liability.

Another specifically vulnerable area is labeling. Each state that has legalized marijuana use creates its own legislation for minimum labeling and marketing rules and regulations. With no uniform nationwide standards, compliance is challenging. This issue is further complicated by ever-changing laws, as states and their legislatures respond to evolving information and standards for the industry. Savvy products liability lawyers are likely to use state consumer protection laws to file lawsuits when their clients have suffered injury or illness due to cannabis and hemp product use.

These are just two examples of the many risks of providing cannabis and hemp products to the public in a new and evolving field, but they highlight the need for protection from legal action when something goes wrong. That is the essential role that product liability insurance plays in this industry.

Preparing for the Inevitable

With the expansion of the legalization of medical and recreational marijuana throughout the United States, it’s only a matter of time before lawsuits against manufacturers and suppliers start growing. Businesses in the cannabis and hemp industries must protect themselves, and product liability insurance should be their first line of defense.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

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Cannabis & Hemp General Liability Insurance

General liability insurance provides businesses —like cannabis and hemp farms and dispensaries — with a financial safeguard in a variety of different circumstances. This type of insurance protects policyholders from risks such as property damage, personal injury, and other factors. In short, it helps people working in the cannabis and hemp industry to get back on their feet after an unforeseen emergency. Still, many business owners lack general liability insurance, and 40 percent have no insurance at all. Here are some of the reasons why every cannabis and hemp business owner needs protection.

What Does General Liability Insurance Cover?

General liability policies cover a wide range of risks for cannabis and hemp business owners. These include:

Manufacturing and Production

This type of insurance provides business owners with cover for their property, equipment, and inventory.

Natural Disasters and Emergencies

In the event of a natural disaster or another emergency, cannabis and hemp business owners might need to cease operations, which could result in loss of revenue. General liability cover provides them with the funds they need to restore business operations.

Transportation Risks

There are a number of risks associated with the transportation of cannabis and hemp from a dispensary to a medical organization or store. General liability insurance provides cannabis and hemp business owners with the peace of mind they need.

Personal Injury

If an employee becomes injured at work, he or she might not be able to make money. General liability marijuana insurance can provide cannabis and hemp business owners with much-needed funds if this problem arises.

Other Types of Insurance

Business owners might want to take out other types of insurance to ensure their business is fully protected. This might include:

Crop damage insurance

The elements can damage crops, which might result in loss of revenue for business owners. General liability insurance lets policyholders protect their crops throughout the year.

Employee Benefits

Employees are the lifeblood of any business. General liability insurance policyholders can provide their employees with a wide range of benefits, including health insurance.

Other Things to Consider

General liability protection for marijuana businesses owners is a relatively new type of insurance. Still, as cannabis becomes legal in some areas of the United States — experts predict that the U.S. legal cannabis market will hit $25 billion by the year 2025 — more people will take out this type of policy. Cannabis and hemp business owners might also want to consider an industry loan to help cover the costs of their new venture.

There are a number of factors to consider when taking out cannabis general liability insurance. Business owners should choose an insurer who provides them with good value for money and excellent customer service, for example.

Business owners should also check out insurance premiums and find out what’s covered in their policy. Different insurers will have different terms and conditions, so prospective applicants should always do their homework.

As more states legalize marijuana for recreational and medical use, more people will enter the cannabis and hemp industry. General liability insurance provides cannabis and hemp business owners with financial support in the event of a disaster or emergency and can help them protect their business and employees in a wide range of situations.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

Insurance Quote Request

Cannabis & Hemp Product Withdrawal/Recall Insurance

With the risk of cannabis or hemp product recalls or complete withdrawals from the market, newcomers and industry veterans alike can suffer tremendous damage to their brand and reputation. So, it’s important for existing CBD companies and newcomers who are just getting into the cannabis, hemp, and CBD markets to consider the significance of having the right coverage. The good news is that product withdrawal and recall insurance can help to fill this coverage gap. Before selecting a cannabis and hemp insurance provider, companies need to understand the basics of product withdrawal and recall insurance. Here are some key factors to consider:

Product Withdrawal/Recall Insurance Coverage Basics

Product withdrawal/recall insurance coverage is a specialized insurance product designed to protect the companies from financial losses and damages to their brand’s reputation in the event of a product recall or withdrawal. It’s critical for CBD companies to have this type of coverage as CBD is not legal on a federal level. That means a federal agency has the potential to deem a CBD product unsafe, and this leaves the CBD company at risk.

Companies producing cannabis products for sale to the public must get approval from the Federal Drug Administration (FDA). If the products do not meet regulations, the FDA can recall the product. Moreover, the FDA also has the power to issue a safety notice to the public to alert consumers about the product recall. A cannabis product recall also makes that product illegal to sell as the FDA’s recall declaration deems the product unsafe to use.

Unfortunately, product recalls are common. According to data from Statista, more than 4,000 consumer products in the United States were recalled by federal agencies in 2015 alone. It’s also not uncommon for the FDA to approve prescription drugs only to recall them years later. This practice is evident in a 2017 JAMA study, which revealed that the FDA recalled 32 percent of therapeutics between 2001 and 2010. Moreover, the FDA has already sent out a public safety notice about the warning letter that it had sent out to a major CBD manufacturer for marketing CBD products that were not approved and that held unproven claims. A Pharmacy & Therapeutics study also highlights that the states of Michigan and Colorado recalled CBD products in 2018 due to mold, mildew, bacteria, and yeast found on the products.

In the case of a product recall, product liability coverage isn’t enough to recoup from the financial and reputation damages these events cause. Moreover, an insurance gap exists because several insurance companies may not get into insuring CBD inventory or companies against loss since the industry has a banking problem. It may also depend on the state the CBD company is in. For instance, CBD companies in Delaware do not have the same flexibility to cover the loss of CBD crops due to weather as they do in California.

Unlike product liability insurance, product withdrawal/recall insurance provides CBD companies with extra protection in the event the government recalls one of the company’s products. So, it’s crucial for companies to have coverage via a product withdrawal/recall insurance policy.

Reduce Financial Impact

Without proper coverage, a product recall may have adverse financial impacts. For example, companies can lose money on unused inventory and even potential sales. The FDA’s public warning notice to Curaleaf is an example of the loss of potential sales. As a result, the CBD company’s stock fell by 30 percent, and it lost its partnership with CVS to sell CBD products in its stores.

Product withdrawal/recall insurance also provides coverage for CBD companies should consumers sue the company for any injuries they may have from the use of the company’s CBD product. It’s crucial for companies to consider these types of costs as they can easily become exuberant, depending on the type of injuries the consumer may have and the state of jurisdiction. With the right plan, CBD companies can find a product withdrawal/recall insurance helps to ease these financial burdens.

Provide Damage Control of the Brand’s Reputation

With product withdrawal/recall insurance, CBD companies can better manage the financial implications that hurt their brand’s reputation. Smaller CBD, hemp, and cannabis companies may not have the budget or cash flow to conduct damage control when a product recall occurs. In fact, it’s not uncommon for businesses to go out of business or file bankruptcy following a product recall. Companies that incur a product recall have to rebuild the trust they had established with their customers. This strategy often requires dipping into a marketing budget to spread awareness and to educate consumers about changes the company makes to improve its product. Without proper coverage, it’s easy for smaller CBD, hemp, and cannabis companies to not have the funds to implement damage control for the brand’s reputation.

Final Thoughts

CBD companies without the right coverage can easily incur several costs. From lawsuits to loss of inventory, a product recall can damage a CBD company’s reputation and hurt its bottom line. Thus, it’s critical for CBD companies to use product withdrawal/recall insurance policies to help cover the extra costs not covered by their commercial general or product liability insurance policies.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or submit your request below.

Insurance Quote Request

Cannabis & Hemp Workers Compensation Insurance

Workers’ compensation insurance is important in all industries, but traditionally workers in the cannabis and hemp industries have struggled with poor coverage. With the medical marijuana industry growing rapidly, businesses need to recognize the importance of workers’ compensation insurance and ensure that all their workers are covered.

What is Workers’ Compensation Insurance?

Workers’ compensation insurance provides coverage for workers who are injured at work. It covers medical bills associated with the injury, as well as replacing wages and funding long-term rehabilitation. For workers who would face financial disaster if they were injured and no longer able to work, workers’ comp is vitally important.

Independent Contractors in the Cannabis and Hemp Industries

It is common in the cannabis and hemp industries to label workers as independent contractors. This designation has many benefits for employees, such as shielding them from tax withholding and unemployment taxes. However, it also means that workers do not receive compensation if they are injured at work.

The Legal Grey Zone

On a federal level, cannabis is still a Schedule I drug, even though some states have legalized it for medical or recreational purposes. This conflict between state and federal laws leaves marijuana businesses in a legal grey zone. Some insurance providers have refused cover to medical marijuana dispensaries due to concerns over criminal liability.

The Future of Workers’ Compensation Insurance in the Cannabis and Hemp Industries

As cannabis and hemp companies gain a firm legal footing and become more mainstream, they need to think about how they will provide workers’ compensation insurance to protect their employees. For now, this will probably mean going to a specialist insurance provider.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

Insurance Quote Request

Cannabis & Hemp Workers Compensation Insurance

Workers’ compensation insurance is important in all industries, but traditionally workers in the cannabis and hemp industries have struggled with poor coverage. With the medical marijuana industry growing rapidly, businesses need to recognize the importance of workers’ compensation insurance and ensure that all their workers are covered.

What is Workers’ Compensation Insurance?

Workers’ compensation insurance provides coverage for workers who are injured at work. It covers medical bills associated with the injury, as well as replacing wages and funding long-term rehabilitation. For workers who would face financial disaster if they were injured and no longer able to work, workers’ comp is vitally important.

Independent Contractors in the Cannabis and Hemp Industries

It is common in the cannabis and hemp industries to label workers as independent contractors. This designation has many benefits for employees, such as shielding them from tax withholding and unemployment taxes. However, it also means that workers do not receive compensation if they are injured at work.

The Legal Grey Zone

On a federal level, cannabis is still a Schedule I drug, even though some states have legalized it for medical or recreational purposes. This conflict between state and federal laws leaves marijuana businesses in a legal grey zone. Some insurance providers have refused cover to medical marijuana dispensaries due to concerns over criminal liability.

The Future of Workers’ Compensation Insurance in the Cannabis and Hemp Industries

As cannabis and hemp companies gain a firm legal footing and become more mainstream, they need to think about how they will provide workers’ compensation insurance to protect their employees. For now, this will probably mean going to a specialist insurance provider.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or  Click Here to Submit an Insurance Quote Request

Insurance Quote Request

Cannabis & Hemp Equipment Breakdown Insurance

lmost any business can benefit from purchasing equipment breakdown insurance. Even small companies can lose thousands of dollars when their computers break down or their copy machines quit copying. Equipment breakdown insurance covers the repair or replacement of vital machines and often the loss of income from these incidents. It’s easy to imagine the financial losses that a conveyor belt breakdown would cause a factory or a bulldozer malfunction would cause a construction company. The equipment required for growing and distributing hemp and cannabis is also expensive and vital, but those in the industry may have problems getting this coverage. After all, cannabis is still illegal on the federal level in the United States, and hemp was as well until just recently. Fortunately the changing legal status of cannabis and hemp is opening up the insurance market and giving producers and distributors more options for equipment breakdown insurance as well as other coverage types.

Cannabis and Hemp Equipment

Producing hemp and cannabis requires expensive equipment and sophisticated technology. The hemp industry received a huge boost from the 2018 Farm Act which legalized hemp and made it a more attractive crop choice for farmers. More farmers are willing to plant and harvest hemp because they can now get loans from FDIC banks and crop insurance from the federal government. Producing hemp in large quantities requires seed drills, transplanters and combines. All agricultural equipment is quite expensive. For instance, a combine can cost $300,000 or more. In addition, producers need large trucks to transport their products to market. Any hemp business needs equipment insurance to keep them profitable.

Cannabis growers also need expensive equipment in order to produce a healthy and profitable crop. Indoor producers need to create the right environment, which often includes grow tents or modified warehouses. The lighting must be conducive to cannabis production by maintaining the optimum amount of light and warmth for the plants. Specialized grow lights are a necessity.

Indoor producers need to provide the right level of air flow, which requires an air system with exhaust, intake and circulation components. Cannabis will not do well without clean, fresh air. Outdoor producers also have to closely monitor their crops and provide advanced security and lighting for their grow area. Both types of producers need to invest in safe and secure transport in order to get their crops to market.

Dispensaries must invest in advanced climate control for their buildings as well as state-of-the art security systems, lighting and storage. Starting and maintaining a cannabis or hemp operation is an expensive proposition, and equipment failure can wreck a harvest or disrupt retail operations. In fact, the loss of equipment could ruin an entire harvest, costing owners and investors hundreds of thousands, if not millions, of dollars. Equipment breakdown insurance is essential for these entrepreneurs.

Procuring Insurance

Until this year, the hemp industry had the same problems acquiring insurance as the cannabis industry still does. It was illegal on the federal level, which meant hemp farmers could not use FDIC banks for loans or accounts. They also did not have easy access to crop insurance or equipment insurance since mainstream insurance companies would not touch them for fear of legal consequences. Since hemp is now legal according to federal law, producers and distributors should be free of these problems. In fact, they should have many options for coverage, especially after the insurance industry adjusts to hemp’s new status.

Cannabis production and sales, on the other hand, are still difficult to insure. Many states have legalized it for medical use and about a dozen for medical and recreational use. Of course, cannabis remains illegal under federal law. While the US government is not currently trying to enforce federal law in states that have legalized the substance, mainstream banks and insurance companies don’t want the risk. Since the banks won’t knowingly take cannabis money, producers and distributors work with huge amounts of cash. This reliance on cash makes them a higher risk for insurance companies. And while cannabis growing and harvesting equipment is not strictly illegal, insurance companies are still not eager to provide coverage. Many prefer to steer clear of a business they consider at least partly illegitimate.

Insurance Options

Cannabis growers and distributors have come to rely on the “green” market for their insurance needs. These are companies that specialize in providing coverage for this particular niche market, and they have especially thrived in states like Colorado and California, which changed their cannabis laws early. As the laws change on the state level, the reluctance of mainstream insurance companies to cover this industry is likely to ease as well.

Since cannabis business owners do have to depend on these niche companies, many of which are new, they have to be careful to choose wisely. They need to know exactly what these policies cover and what they do not. They also need to know if the company reliably pays out on their policies. Unfortunately, some cannabis business owners have been quite disappointed with their coverage.

Experts warn buyers to make certain all of their risks are covered, including equipment, crop, liability, theft, etc. Those in the market should also study all exclusions on the policy. Standard insurance has an illegality exclusion, which is why the big insurance companies don’t want to cover cannabis. Obviously, any cannabis policy cannot have this traditional exclusion or basically any claim could be denied.

Producers and retailers need to watch for contraband exclusions as well as any language limiting coverage due to criminal acts and smoking products hazards. They should look for policies that specifically note that state law will “govern” the policy.

Despite their relative newness, green insurance companies are the experts on crafting language for the cannabis industry. Before buying, owners and distributors need to shop around for the best rates and coverage available. Recommendations from others in the business are an excellent way to find the right insurance company for cannabis businesses. And most state-legal businesses involve medical marijuana and not recreational. By far the majority of states still have laws against recreational cannabis.

Cannabis and hemp have a huge market already, and it’s expanding. It’s getting more and more socially acceptable to use CBD oil, hemp products and marijuana. The conflict of federal law versus state law does cause a significant amount of confusion, particularly with the banking and insurance industries. Of course mainstream businesses want in on the profits from cannabis, but they are restricted by fear of federal law enforcement. They certainly don’t want to be labeled part of a criminal enterprise. Currently, any problems with hemp insurance coverage likely stems from the product’s recent status change. The policies will continue to evolve as the industry settles into mainstream status.

Cannabis will be legal on the national level at some point in the future, but until this change takes place, those in the industry will continue to have financing and insurance issues. Anyone searching for insurance coverage will have to find a reputable company that understands how to properly cover the industry. Any policy must cover equipment repair or replacement as well as revenue loss from breakdowns. A cannabis business needs carefully crafted, special insurance to cover their specialized risks.

Skyfront Insurance

1980 Festival Plaza Dr., Suite 425
Las Vegas, NV 89135

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call 866-742-0776 EXT. 4 or submit an Insurance Quote Request below. 

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