The type of insurance you need depends on your business activities, and the risks you are exposed to. All states have specific laws in regards to insurance requirements for different business types. For example, in California, all cannabis businesses are required to have a Commercial General Liability Insurance policy with a minimum of $1,000,000/$2,000,000 in coverage. Hemp, however, is a new industry in California and has no requirements for insurance, however, you will find most retailers or distributors will require businesses to have insurance covering their products for liability before they will allow the business any space on retail shelves.
Insurance regulations are governed by a state regulatory body and each state can set its own requirements. Each state program has their own name, such as “The California Department of Insurance” or “Office of the Insurance Commissioner” (Washington). You can look to these regulatory bodies for information on what you need for your specific business.
Some insurance is a no brainer – All commercial vehicles need to have Commercial Auto Insurance, all businesses that have employees are required to have General Liability Insurance, etc. These are not business specific. Beyond these, when we look at specifically the THC and CBD market, we need to think about what makes the business unique and what it is exposed to.
Beyond the legal requirements based on your place of business, when making insurance decisions regarding your company it is in best practice to look at what could happen financially within your business, and the loss you would retain. For example, in California Product Liability is not a requirement for Cannabis Businesses, but if someone were to get sick using your product, you could be at risk for hundreds of thousands of dollars in medical bills and damages. With Hemp not requiring any insurance currently, a business owner needs to take a good hard look at what they may need – equipment breakdown, crop coverage, and theft may be a few to consider.
Things also can change year to year, as new insurance regulations are passed. Your business may have grown this year, or new laws passed can affect your business insurance requirements for both THC and CBD based businesses. Each year you will want to review your policy to ensure that you are up to date with your coverage and there are no gaps in your insurance policy.
Overwhelmed? Its okay, we are here to help. We have specialists in our office that only work on Commercial Cannabis and Hemp Insurance, and can assist you! Give us a call at (916) 967-7715 today!