You’ve probably heard the cannabis industry referred to as the Wild West. It has been a rapidly changing, developing, and expanding landscape presenting unique risk management considerations for those involved in the cultivation, production, dispensing, and sale of cannabis and cannabis-derivative products.
Effective October 17 of 2019, recreational marijuana use was legal in Canada. Propelling a new industry in our nation, and growing risk in insurance. In 2020, Cannabis sales doubled hitting $2.6 Billion (Forbes), by 2025 the Canadian cannabis market is forecast to reach 9.2 billion CAD (GlobeNewswire). This means this “bud”ing industry is on one “blunt” growth trajectory.
Puns aside, cannabis retailing is unique. Unlike the standard retail operation, cannabis requires a deeper understanding of what coverages are mandated for the heavily regulated industry. As these mandates fall at both the national and provincial levels, if your business involves cannabis in any way, it is important to have a team in your corner to make sure you are protected so you can grow your business.
Work with an expert who understands your business.
Leading up to legalization, our brokers worked with producers and sellers so they were prepared and coverage was in place and ready to “roll” come October 17, 2019. With experience working with cannabis dispensaries/retail, manufacturing, and growing operations from start to finish, our brokers will visit prior to construction to ensure coverage is in place as you grow. With an assessment based on the scope of work in your operation, we tailor the coverage you need to protect your business and will be straightforward with what you don’t.
If you’re getting ready to open a cannabis business – whether it’s an online direct to consumer, wholesale, or a bricks & mortar store – trust Gifford Carr to protect what matters most to you, and your business.
TYPES OF CANNABIS BUSINESSES WE WORK WITH:
- Cultivators
- Processors/Harvesters
- Manufacturers (processing and manufacturing)
- Wholesale Distributors
- Recreational & Medical Marijuana Dispensaries
- Cannabis Transporters
- Cannabis Laboratories (including Testing, Research and Development Labs, and Facilities)
- Cannabis Landlords, Leasing Facilities, and Business Owners
- Property Managers
- Security
- Cannabis consultants
- Cannabis directors and officers
- Hospitality operations (including cannabis clubs and vape lounges)
RISKS FOR CANNABIS BUSINESSES:
Some of the business coverages, like commercial property, directors and officers, general liability, and cyber liability, cannabis operations have unique risks to consider, including:
- Spoilage (including mold/fungus affecting your cannabis inventory)
- Product recall
- High market/dollar value of products and inventory
- Increased probability of fire
- Misinterpretations in relation to Canadian cannabis laws and regulations
COVERAGE TO BE CONSIDERED FOR CANNABIS GROW OPS IN ONTARIO:
- Agricultural and Manufacturing Coverage, cultivation and packaging operations means you likely have fields, crops, buildings, and equipment to also be considered for coverage;
- Environmental, with fields and crops, you may want to consider coverage is in place to help with an environmental impact;
- Transportation, including commercial vehicles and cargo.
Note, if you more than 5 commercial vehicles you may qualify for fleet coverage!
Commercial Cannabis Business Insurance Solutions
FAQ
I'm opening a dispensary, where do I start?
Start with builders’ risk with premises liability for your construction and renovations to get your shop ready. Note, that many insurers will require all building updates to be done. For example, if the building is older, all plumbing, heating, and ventilation need to be up to code for the insurance companies to provide coverage, and are keener on these updates for cannabis operations.
For the type of operation, there are minimum commercial general liability (CGL) requirements, which as of November 18, 2020, the OCS dropped to a minimum of $5 million.
Stock and equipment need to be inventoried, to ensure it is properly insured for the right value.
Do I need business interruption coverage?
In the event of a loss where business could not continue as normal for a period of time, and there is an essential tie into the business’s physical location, this coverage would help cover profit and ongoing expenses during repairs to help tied over the business until reopening operations at the same level of operations prior to the loss, or until your 12-24 month period of indemnity is exhausted, whichever comes first.
The key here is the time until you are back up to your level of operations prior to the loss. After all, continuity is critical in business. Connect with your local broker to understand more about this kind of cover and the indemnity period in place for your policy.
What happens if my stock goes bad?
Cannabis, unlike many other retail operations, has a stock with shelf life and is easily spoiled. Problems with temperature causing dampness and moisture can mold and ruin your stock.
Stock coverage provides coverage for your actual physical product, your cannabis, and the accessories you’re selling, in the event of insurable perils that impact your stock, like fire, theft, mold (caused by failing heating and cooling systems), and burst pipes.
Where can I get insurance for a cannabis company in Ontario?
Connect with your local broker. Whether you’re a licensed producer, distributor, or provide another legal business related to cannabis, you need full insurance coverage customized to your specific operation in a highly regulated industry. With access to insurance solutions from coast to coast, Gifford Carr can connect you with the coverage solutions tailored to your operation while providing the local expertise for your market.
Protecting what matters most to you.
It’s what we do.
