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Medical and Recreational Marijuana

Whether your business is medical marijuana, recreational marijuana, or both, Hayes Brokers has the insurance companies and coverage to meet your needs. With over 20 years experience in the cannabis industry, the brokers at Hayes can perform a thorough risk management analysis to determine the best coverage portfolio for your operations.

The Business Coverage You Need

Commercial businesses of all types require the same insurance coverage for the basic aspects of the business: Commercial General Liability, Property, Auto, Workers Compensation, Flood and Earthquake.

To avoid coverage gaps and make certain your business is properly insured, your Hayes broker will want to discuss most, if not all of the following coverage:

Hayes can also help cannabis owners with insurance for their homes, personal autos and more.

The Specialty Coverage You Need

The special nature of cannabis businesses means they need special coverage, and Hayes can help you determine if you need:

  • Crop Coverage – this is typically available for indoor grow operations only
  • Product Recall – if a product sickens or kills a consumer, or if a tested product is found to contain pesticides, the entire crop and all products produced from it will need to be recalled, often at extraordinary expense
  • Products Liability – the majority of products liability claims center around consumables, in particular candies or oils.
  • Special Events Coverage – if you attend events off-site your premises liability coverage may not cover you, so special events coverage would be necessary.

Special Coverage Requires Special Treatment

Due to the controversial nature of cannabis businesses, many insurance companies require special underwriting in order to write coverage. Insurers may require that the insured meet or exceed state and local regulations for security of product and safety of consumers and employees.

Of particular concern is the product safe, which should be a minimum of 700 lbs, TL-15 bolted to the floor. A 2,000 lb standalone safe is also acceptable. Underwriters will usually require multiple safes depending on the amount of product kept on hand.

You can trust Hayes Brokers to guide you through the underwriting process step by step until coverage is secured.

Safes for Medicine Protection

Generally the minimum for a safe is 700 lbs., TL-15 bolted to the floor. A 2000 lb safe- standalone OK.

(Preference of underwriters is to have multiple safes when total value is high. Also the weight of a safe is only one measure of its ability to prevent theft. The “TL” is timeframe for a pro to crack a safe.


Business Risks

Insurance Coverage / Policy

Notes


Premise and Operations (typically the renter) Bodily Injury Medical Expense-no fault Fire Damage to Building DISPENSARIES, KITCHENS AND GROW FACILITIES
Commercial General Liability Only covers on-premise-but can get an endorsement for off premise special events. Covers Liability for Collective, LLC, Corp members (Does not cover for injury to staff or volunteers- that is Workers Comp)
Required by all landlords (“Additional Insured” Certificate) Need to know: Dispensary? Grow Facility? Delivery to Patients? Grow- requires elect. certification

Damage/loss of Property Water Damage (not flood) Theft (most significant of all risks)
Property Insurance Medicine (Cannabis) Contents (Business Personal Property) Desks, chairs, display cases, grow lights, computers, security equip; Tenant Improvements Glass- i.e. storefront window Loss of income
Central Station Alarm System 700+ lb. safe bolted or 2000+ lb safe unbolted Other significant security procedures and systems Loss of Income- Payment of net income during loss period.

 


Out Door Grow (typically the renter) Bodily Injury Medical Expense-no fault
Commercial General Liability Only covers on premise. Special event endorsement available for events off premise (Does not cover for injury to staff or volunteers- that is Workers Comp)
Required by all landlords (“Additional Insured” Certificate)

 


Building Owner (landlord)  Protection from Liability and Fire, Etc.
Building Owner General Liability and Property coverage –if you lease to MMJ tenants.
Replacement Value of Building Disclosure of tenant businesses.

 


Injury/Sickness/Death of employees or volunteers related to work Employee Protection
Workers Compensation No fault Coverage for death, injury, sickness, dismemberment – $1M limit
Required by law with first employee.  Important: volunteers likely considered employees! Owners for Non-Profits must be covered

 


Employment issues– wrongful term., sexual harassment
Employment Practices Liability Insurance (EPLI)
Legal fees usually > awards

 


Health coverage for Employees
Health Insurance – Group or Personal A group is 2 or more-Cannot deny coverage.
Recently passed health reform act requires Health Insurance for small businesses.

 


Death – family resource planning
Life Insurance – Group or Personal
For those who use Marijuana at any level, Life Insurance is difficult to obtain. Hayes has competitive resources.

 


Crop Protection Damage/loss of marijuana crop during growing cycle
Crop Insurance Can covers loss due to power outage, water damage, fire, theft, etc. Generally does not cover mold, plant disease…
Currently only available for indoor grow facilities Requires  electrical certification Central Burglar Alarm

 


Liability of Directors and Officers of MMJ Businesses – to protect their personal assets from possible judgments
Directors and Officers Professional Liability Insurance (D&O) General protection from errors and omissions of directors and officers

 


Liability for Professional Services
Professional Liability (Errors and Omissions) Protects professionals against claims related to errors and omissions related to their specialized skill.
MMJ and professionals who are associated with MMJ business (Doctors, Massage Therapist, Acupuncture Therapists, Physical Therapists, Nutritionists, etc.)

 


Medicine DeliveryAuto Liability and Property Damage (personal policy won’t cover)
Commercial Auto (not personal auto) Primary
Vehicle bus. owned and personal (non-owned by collective)

 


Medicine DeliveryProperty loss of medicine in transit to patient under Medicine Delivery- Auto above
Endorsement (Addendum) to Property Policy for “Goods In Transit”  OR Cargo Insurance.
Underwriters have criteria to help prevent in transit theft. Give max $ limit on board

 


Events Property and Liability risk for events held  off premise
Special Events Insurance Policy- for entire year or by endorsements to General Liability for the event.
Gen. Liability, unless otherwise stated, is On-Premise only

 


“Liquor Liability” in the event that a customer uses MMJ or Alcohol on premise as an approved activity of the collective and they drive off- causing an accident- related to their MMJ use.
Marijuana Endorsement – much like Liquor Liability – which protects “bud tender” for liability claims if allowing customer to become impaired and the customer causes injury or damage after leaving the premise.
Impairment on premise is covered, if medicine use on-site is within the law. (State-wide no smoking laws apply.)

 


Kitchen Facilities- liability of edibles which cause injury/illness
General Liability insurance which recognizes  kitchen operations and includes Products and Completed Operations Coverage
Prod and Completed Ops is usually excluded from MMJ policies. Call to discuss.

 

*In the notes above, there will be some specific and developing insurance underwriting requirements not included in this table.


 

This information is a very general guideline about the various business risks and the opportunity to cover those risks with insurance. It is not a comprehensive definition of risks and coverage. As laws change and insurance companies vary policies, this information will change. Updated 4/22/2016

As of May 29th 2015, there have been changes to Lloyd’s of London cannabis insurance. Please read this page for more information.

Want to learn more? Call today: (800) 869-8643