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Commercial Cannabis Insurance Coverages Needed

Commercial Cannabis Insurance Coverages Needed

Cannabis operations, whether medical or recreational, are subject to the same insurance needs and requirements as most other businesses.  However, there are a few coverage options that you should take note of when purchasing coverage for your business.

Do You Need Products Liability?

General Liability insurance is needed for every type of cannabis business.  If the space your business occupies is rented or leased, the landlord or lessor will require proof of liability insurance at the business location.

Products Liability is usually not included in the General Liability for a cannabis business. This is one coverage that is absolutely necessary to the industry. From growth to distribution, from manufacture to retail operations, Products Liability will protect your business from claims of negligence, defect and more.


Is Your Property Underinsured?

Property Insurance coverage is important to all businesses, but there are special areas of concern for medical marijuana businesses and one of them is Tenant Improvements & Betterments.

This coverage is often overlooked because business owners believe that contents coverage is enough.  Hayes Brokers knows that medical marijuana businesses put a lot of money into customizing the retail space you occupy.  These customizations are known in the insurance industry as tenant improvements & betterments.

Tenant improvements & betterments are defined as substantial improvements that the tenant cannot necessarily take with him when he leaves, but that he would lose money on in the event of a fire or other property damage.  Special display cases, shelving, floor and wallcoverings are the sorts of tenant improvements that should be included in your property insurance policy.


Better Safe Than Sorry

For medical marijuana the medicine safe is of special concern to insurance companies.  Both the state and the insurance companies require certain safe specifications for medicine.  Your safe should meet or exceed these safety standards.  Hayes Brokers can provide information on how safes are rated for impact and reliability so that you can make the right decision for your business.


Workers Compensation & You

Rates for Workers Compensation are set by the state for each employee classification, but there are ways to control policy premiums. One way is by making sure your employees are classified correctly.

The job that each employee does defines his or her classification. In most medical marijuana dispensary operations there are three classes: store, clerical and drivers.  The clerical rate is the lowest, because employee injury in this class is low.  The highest rate is for drivers, since the possibility of being injured while driving is higher.  If an employee is split-class, the insurance company will default to the higher rated class for that employee, so it doesn’t make sense to have a clerical employee that does occasional deliveries, as this payroll will default to the driver classification rate.  It is better to have a dedicated delivery employee.

Another thing to consider is whether the person working for you is an employee, a subcontractor or an independent contractor. Unfortunately, your classification of a worker may be different from the state determination of worker status and that can affect your insurance premiums. Check out Who Is Considered An Employee for more information.

Proper employee classification is key when writing a Workers Compensation policy to keep costs under control. It is even more important during the policy audit to prevent paying higher additional premium at the end of the policy.  Your insurance broker can help you determine the proper classifications for your employees.


When purchasing insurance for your business it is important to have an insurance broker with the knowledge and experience to know where there may be coverage gaps and how to fill them. Contact Hayes Brokers to take advantage of their 20+ years insuring the medical marijuana industry.

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