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Frequently Asked Questions: Cannabis/Hemp/CBD Insurance

Q: What types of insurance is available for a cannabis business?

General Liability: Insurance policy designed to protect your business from personal injury & property damage as a result of your business operations.

Product Liability: Insurance policy designed to protect your business from claims of sickness/disease as a result of exposure to or consumption of the products you produce.

Property Policy: Insurance package designed to protect the capital assets of your organization

Professional Liability: Insurance policy to protect your business from loss events involving failure to perform your professional duty. (think Lawyer, CPA, Consultant)

Workman Compensation: Insurance policy designed to protect your business business from the expense of a loss that results from an employee being injured while working.

Crop Insurance: Insurance policy designed to replace the value of an agricultural product following a covered loss event. These policies can take many forms and may be referred to as Crop Coverage, Stock Throughput or other similar name.

Business Auto: Liability and/or property coverage for automobiles operated by employees in the course of performing their job duties. Coverage can be purchased on vehicles whether they are owned by the business insuring the vehicle or in cases where the vehicle is owned by the employee or someone else.

Customized Policy Options: Cyber Liability, Inland Marine, Product Recall and options that include claim settlement with claim expense in addition to (outside of) policy limits are also available.

Q: I am a landlord with a marijuana, hemp or cannabis based tenant, can you find me insurance too? 

YES, we can help a landlord secure a great policy option from an A rated insurance carrier that does not mind that you have a tenant engaged in the cannabis industry.

Q: Can you cover my employees if they are hurt on the job?

Yes, we are happy to assist with your workers compensation policy needs.

Q: Can I purchase any kind of policy to protect the executives, directors and managers of my organization?

Yes, Directors and Officers coverage is available to provide protection for your executive team from a possible claim/loss event relating to their fiduciary responsibility. These policies can also include coverage designed to protect the executives & management from employment practice (hiring, firing, harassment) related claim events.

Q: I am a processor making a CBD based product, my source material originates outside the US can I still get coverage for my products?

Yes, there are insurance carriers that provide excellent policy options for CBD and businesses producing products in the cannabis health and beauty aid (CHABA) market segment.

Q: I have been told that it is hard to get proper insurance if I make/fill cartridges intended for use in a vaporizer is that true?

Yes, several insurance companies do not like e-cig/vape cartridges and exclude coverage for these items. To make sure you are not paying for insurance that does not properly protect your business it is important to work with an experienced cannabis insurance agent that can help you understand the requirements and limits of your coverage.

Q: Are there any special considerations that I should keep in mind when shopping for insurance for my licensed marijuana business?

Yes, for tax planning purposes, most cannabis businesses segment their operations into multiple business entities. How your business structure is built will determine where policy coverage is purchased. It is important that you work with an experienced agent who understands the industry to make sure your policy coverage effectively protects every segment of your marijuana business.

Q: Can you elaborate on what you mean by business structure will dictate where coverage is purchased?

Because of the impact of section 280E of the US tax code, many cannabis business owners segment their business holding into individual business units for tax planning purposes. For instance, a marijuana dispensary licensee who also owns the building in which the dispensary operates would typically create two independent business enterprises, one for the real estate enterprise (landlord) and a second for the business entity that holds the marijuana license and runs the dispensary. In cases such as these, it often requires the purchase of two or more policies to properly protect the business owner. Failing to purchase policies in the correct business entity name could leave the building uninsured for a loss and/or put the marijuana licensee in violation of regulatory requirements.

Q: What about crop insurance? Is there anything available in the market that could protect my business if there is a catastrophic loss of my crop?

Yes, there are insurance carriers and products in the market that provide coverage for your indoor or greenhouse grow if your crop is lost to fire, theft, or other qualifying event. However, it is not uncommon for us to suggest our clients consider business interruption coverage instead of crop coverage to enjoy a broader list of covered losses and more cost-effective policy options. Currently there are not effective insurance products available to secure an open air outdoor grow. 

 

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