Why is insurance a must for cannabis dispensaries?
Cannabis products come with a wide range of risks, from side effects to allergic reactions. Business insurance helps pay for legal costs if a customer becomes ill, or if someone trips and suffers an injury in your shop. Many states also require insurance coverage for dispensaries.
Find coverage that matches your risks
4 insurance policies every cannabis dispensary should consider
These insurance policies help dispensaries pay for lawsuits, injuries, burglaries, and other small business risks.
General liability insurance
This policy covers third-party lawsuits from common accidents, such as a customer who falls into a glass display at your dispensary and suffers a serious cut. State laws and leases can require this coverage.
- Customer bodily injuries
- Accidental damage to a customer's property
- Defamation and copyright lawsuits
Product liability insurance
Product liability coverage helps pay for legal costs related to your cannabis products, such as an overdose caused by a misprinted label on an edible. It's often included in general liability insurance.
- Allergic reactions to undeclared allergens
- Mislabeled cannabis products
- Defective cannabis products
Commercial property insurance
Commercial property insurance covers your marijuana dispensary's building and everything in it. It can help you recover financially from property damage due to a fire, storm, or other covered incident.
- Fires
- Storms
- Theft and vandalism
Workers' comp insurance
Workers' compensation protects cannabis companies and sole proprietors from work-related medical bills that health insurance won't cover. Most states require this coverage for your employees.
- Medical expenses from workplace accidents
- Disability benefits for injured workers
- Legal costs from work injuries
Cannabis dispensary insurance costs
Dispensary owners often save money by buying general liability insurance, product liability insurance, and commercial property insurance together in a commercial package policy (CPP).
From our customer data, here's a quick look at average cannabis dispensary insurance premiums:
General liability: $167 per month
Commercial package policy: $548 per month
Workers' compensation: $374 per month
Factors that can influence retail business insurance costs include:
- Type of business, such as e-commerce or brick-and-mortar
- Cannabis operations, such as wholesaler, distributor, processor, or cultivator
- Number of employees
- Business income
- Types of business insurance purchased
- Deductibles and policy limits
- Claims history
Hear from business owners like you who purchased insurance coverage.
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Common questions about business insurance for cannabis dispensaries
Will insurance cover my dispensary if it's forced to close temporarily?
Yes, you can buy commercial insurance that covers forced closures due to fires, burst pipes, and natural disasters.
Business interruption insurance is a popular policy that helps dispensaries and other businesses stay afloat until they can reopen.
This policy can help pay for a wide range of expenses related to an unexpected closure, such as:
- Rent
- Loan payments
- Employee wages
- Relocation expenses
- Tax payments
- Lost income
However, this policy won't cover property repairs, such as those caused by a fire or flood. For that, you'd need a commercial property insurance policy.
Many insurance carriers include business interruption insurance when you buy property coverage, such as a business owner's policy or commercial package policy, or you can add it as an endorsement. It's sometimes called business income insurance.
Are cannabis dispensaries required to carry business insurance?
Yes, your dispensary will need business insurance to comply with state laws, in almost every case.
Here are a few instances where insurance is required:
- You own a business vehicle. Most states require commercial auto insurance for vehicles owned by a business. Each state has its own requirements for how much auto liability insurance you need.
- You have employees. Dispensaries are typically required by law to carry workers' compensation insurance for their employees.
- State laws require cannabis insurance. Each state has different insurance requirements for cannabis businesses. For example, California requires dispensaries to carry a general liability policy with a $1 million per-occurrence limit and a $2 million aggregate limit.
In addition to state requirements, landlords, lenders, and clients might require you to carry business insurance. For instance, you'll likely need general liability insurance in order to sign a commercial lease.
Does business insurance for dispensaries cover shoplifting?
Dispensaries carry expensive products, which means shoplifting is a serious threat. The following policies help limit losses related to shoplifting and similar crimes:
- Commercial property insurance helps pay for stolen inventory, equipment, and furnishings. It also covers damaging events like vandalism, hail storms, and fires.
- Employee dishonesty coverage covers your losses if an employee steals cannabis products or cash from your dispensary. You can add this coverage as an endorsement to your business owner’s policy or commercial property insurance.
- Fidelity bonds reimburse your customers in the event of employee theft or fraud. However, your dispensary will need to pay this amount back to the company that issued the bond.
What other types of insurance should cannabis dispensaries carry?
Depending on the specifics of your business, you may need additional types of coverage as part of your risk management strategy.
Here are several other policies that are common in the cannabis industry:
- Business personal property (BPP) insurance protects your computers, equipment, and inventory. Cannabis businesses that don't have a physical space can add this coverage to their general liability insurance as an endorsement.
- Equipment breakdown coverage helps pay for the repair or replacement of a piece of machinery that breaks down unexpectedly, such as a point of sale (POS) system or an automated packaging machine.
- Product recall insurance covers costs related to recalled products, including everything from disposal fees to public relations efforts.
- Management liability insurance includes policies like employment practices liability insurance (EPLI) and directors and officers insurance (D&O). EPLI covers lawsuits related to violations of employee rights, while D&O pays for legal fees if a board member or officer is sued for a decision they made on behalf of your company.
- Cargo insurance is recommended for any cannabis business that transports products. It pays for theft and other losses that happen in transit.
- Crop insurance is especially important for cannabis growers. It helps you recover financially from losses due to drought, hail, disease, and similar incidents.
- Finished stock insurance covers agricultural products, including cannabis, in the event of theft, spoilage, and other losses that damage or destroy your inventory.
Speak to a licensed insurance agent today who can help you find the right insurance solutions for your dispensary at an affordable price.
