Top 4 Questions in Cannabis Insurance, Answered.
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.
Leading up to the national legalization of cannabis in Canada, our brokers worked with producers and sellers so they were prepared and coverage was in place and ready to “roll” come October 17, 2019. We sat down with our in-house cannabis insurance experts to get their broker insights on the top questions they are hearing from business owners in the industry-leading up to the two-year anniversary of legalization.
1. 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.
2. 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.
3. 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.
4. 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.
If you’re getting ready to open a cannabis retailing business – whether it’s an online direct to consumer or a bricks & mortar store – connect with your local broker to protect what matters most to you and your business. Learn more about Commercial Cannabis Insurance solutions with Gifford Carr!