Cannabis Industry Insurance Buyer’s Guide


As the legal cannabis industry continues to grow, so do the business needs of its related enterprises. From accounting services to warehouse space, cannabis companies need a variety of support services to thrive. Among other things, this includes specialized insurance policies that safeguard businesses from common perils and risks associated with this growing industry.

If you own or operate a legal cannabis company, you probably have many questions about insurance policies relevant to your business. Do you need liability insurance? What about general liability coverage for your space? Or what about property insurance if something burns down in your cultivation facility?

Fortunately, there are different types of insurance policies that help businesses like yours navigate this niche industry. If you’re looking for cannabis-specific insurance, here is a guide to the types of policies that might apply to your business.

General Liability Insurance for Cannabis Companies

Liability insurance is one of the most basic and essential coverage types in the business world. It protects your company from being held accountable for the actions or negligence of others.

General liability coverage can be broken down into two main types: product liability and professional liability.

Product liability insurance protects the company in the event it is held responsible for injury or death related to one of its products.

Professional liability insurance protects the company in the event someone is injured or suffers significant financial loss due to the negligence of your employees.

A comprehensive general liability policy will include coverage for premises liability, personal injury, product liability, and workers’ compensation.

General liability insurance is the type of policy that is useful for protecting your business from the everyday risks of running a company. Whether you’re in the processing or retail side of the cannabis industry, general liability coverage can be helpful in covering expenses related to accidents or other incidents that may occur on your premises.

Business Interruption insurance

Business interruption insurance, or BI, provides the financial means to continue running a business in the event of a significant interruption, such as a fire or extended power outage.

Tailor-made for companies in the cannabis industry, a business interruption policy can help maintain critical operations during unexpected setbacks that affect your ability to conduct business as usual.

Business interruption coverage can extend to loss of inventory, loss of income, and even loss of goodwill. A business interruption policy can offer financial assistance for a variety of expenses related to an interruption. This can include an alternative location for your business, employee wages during a shutdown, loss of rental income, and advertising costs if you need to find a temporary location.

For example, the city of Santa Barbara, California declared a state of emergency due to the Thomas Fire. The city enacted a mandatory evacuation that affected hundreds of businesses, including cannabis cultivators and retailers. While government-subsidized relief is available, businesses have to apply for the funding. Business interruption insurance can offer financial assistance during this type of situation.

Cyber Liability Insurance

Every industry is susceptible to data breaches and cyber attacks, but the cannabis industry is at especially high risk. The cannabis industry is cash-based, but most businesses accept credit cards.

If a business is using an online platform to accept cards, the company is required to have a data security infrastructure in place to keep the information secure. Otherwise, the website operator can be held liable for any financial loss incurred by credit card holders.

Cyber liability policies protect the company from having to pay for the cost of any customer data breaches that might happen as a result of this. Protecting your business from cyber attacks is more important than ever. A cyber liability policy can reimburse you for expenses related to responding to data breaches, covering legal costs, hiring a cybersecurity expert, and paying customer claims.

Inventory Insurance

Cannabis products are highly perishable, and inventory is likely to spoil if it’s not properly maintained. If a business conducts a sale, the risk of underwriting inventory loss increases. This is why many legal cannabis companies choose to get a specific kind of insurance called inventory coverage.

Inventory insurance is designed to cover the financial loss of product that was purchased to sell in your store. Cannabis-specific insurance providers offer two types of inventory coverage: replacement cost and cash value.

Replacement cost coverage ensures that the insured receives enough money to purchase the same amount of product again.

Cash value coverage pays the insured a percentage of the product’s value if it was already paid for in full before being damaged or stolen.

Commercial Property Insurance

For cannabis business owners who own a space where they conduct commercial activities, commercial property insurance can protect the business and the property in case of fire or other unforeseen events.

There are two basic types: buildings and contents. Buildings cover the structure itself, while contents cover the things inside the building, such as inventory and equipment.

Commercial property insurance can also cover additional perils that may not be covered in a standard home insurance policy, such as flooding or certain natural disasters. Commercial property insurance isn’t a standard feature of homeowners’ policies.

If you own a building used for commercial purposes, you need to purchase a specific policy to protect the structure from loss. Commercial property insurance policies can vary widely based on the needs of individual clients.

Grower’s Insurance for Cannabis Cultivators

Cannabis growers rely on hydroponic equipment and climate control systems to cultivate high-quality cannabis. Unfortunately, these machines can break, malfunction, or become stolen, leaving businesses to foot the bill for the loss.

Grower’s insurance protects agricultural businesses from these types of losses. Cannabis grower’s insurance policies vary based on the needs of the client.

These policies can cover expenses related to the loss of equipment or a grower’s inability to produce harvest due to a covered event. Grower’s insurance policies usually cover the loss of or damage to plants due to natural disasters or theft.

Product Liability Insurance

Product liability insurance is designed to protect businesses from the financial ramifications of a product-related lawsuit. This type of insurance is often used by large companies that manufacture a variety of products.

Product liability insurance is sometimes also required for businesses that sell products internationally. Product liability insurance covers legal expenses when someone alleges that a product made by the insured company caused bodily injury or property damage.

Product liability insurance is not required by law for small business owners unless they sell a product that has a significant risk of causing harm.

Call to Get a Quote for Cannabis Industry Insurance

As the legal cannabis industry evolves and expands, so do the needs of its businesses. From providing employees with proper insurance to protecting a grower’s equipment and crops, specialized policies can protect cannabis enterprises from the threats that exist in the industry. With the right coverage, cannabis businesses can focus on what matters most: providing safe and quality products to the public.

Millers Insurance Group provides insurance options to companies in a variety of industries, including cannabis-related businesses. Please reach out to us or fill out our online form to get an insurance quote today for your cannabis company’s coverage

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