Those involved in the hemp and cannabis industry need insurance just like everyone else. But this particular industry has special challenges and considerations.
Many insurance companies remain cautious about covering the hemp and cannabis industry because of marijuana’s classification as a Schedule 1 narcotic in the eyes of the federal government.
“Risk professionals representing cannabis businesses in the US, as well as landowners and landlords, can face a range of issues as a result of the disconnect between state and federal cannabis laws,” writes Krizzel Canlas for Corporate Risk and Insurance magazine.
The article goes on to recommend that those involved in the industry in any way need an insurance company intimately familiar with the laws and regulations and their differences at the state, local, and federal levels.
Ian Stewart of Wilson Elser, with more than 20 years of experience in complex litigation disciplines including cannabis, sees the potential for a wave of consumer class action lawsuits concerning the product itself, as well as liability to prescribing doctors.
Along with general liability and property insurance, those with businesses in the Cannabis and hemp industries need to think about:
- Indoor Crop coverage
- Finished Stock coverage
- Stock While in Transit coverage
- Commercial Auto coverage
- Workers Compensation
- Directors & Officers insurance coverage
Conflicting state and federal laws, regulations concerning the treatment of cannabis and hemp products, and the reluctance of major carriers to get involved with the cannabis industry can present obstacles in finding the right insurance policy. Cannabis and hemp businesses are faced with purchasing substandard policies that may leave gaps in their coverage.
Skyfront Insurance Services can help to meet these needs. Founded by cannabis industry experts, Skyfront runs an agency “dedicated 100% to serving and protecting top tier compliant cannabis businesses.”
They understand the cannabis industry at Skyfront, and can cover you “whether you operate a direct plant-touching business or an ancillary services firm.”
Their products run from standard business insurance to the most specialized in the market, including:
- General Liability
- Product Withdrawal/Recall
- Product Liability Insurance
- Equipment Breakdown
- Cannabis & Hemp Real Estate
- Crop Loss
- Workers’ Compensation
- Distribution / Transportation / Cargo
- Business Interruption
- Property Coverage
- Wrap Up Liability
- Earthquake and Flood Coverage
What exactly do each of these cover and why do you need them?
General liability covers you from things like bodily injury, property damage, and personal injury that occur at your business.
Product Withdrawal/Recall insurance covers out-of-pocket expenses to insured distributors, retailers, vendors, customers or other third parties resulting directly from withdrawals or recalls of product.
Product Liability Insurance protects you against financial loss arising out of the legal liability incurred by an insured because of injury or damage resulting from the use of a covered product or out of the liability incurred by a contractor after a job is completed (completed operations cover).
Crop insurance is purchased by agricultural producers, including farmers, ranchers and others to protect against either the loss of their crops due to natural disasters or the loss of revenue due to declines in the prices of agricultural commodities.
Cargo Insurance covers loss and/or damage during the movement of cargo from one point to another. Shipment coverage can be by sea, air, or inland. Policies are tailored to suit individual shipper’s needs. Coverage can be provided for all risks or named perils basis.
Wrap-up insurance is a liability policy that serves as all-encompassing insurance that protects all contractors and subcontractors working on large projects costing over $10 million. The two types of wrap-up insurance are owner-controlled and contractor-controlled.
The remaining coverages meet the needs of businesses in general, but they all highlights the need for thought and risk assessment when choosing coverage for your cannabis or cannabis-related business.
Careful due diligence, legal advice from counsel familiar with this area of law, and proper insurance are always a wise choice in the cannabis and hemp industries.