The process to obtain insurance in the industry is lengthy, detailed and extremely important to get right both so you can operate legally and in the case you have a claim. Procuring insurance takes a great deal of time to quote a business in the cannabis space and you need to know a few things beforehand. We strongly recommend working with a seasoned industry veteran such as Amanda Kugler at the Roots who we interviewed for this article.
Find an insurance agent that knows cannabis
First and foremost is to work with an agent that understands your industry. Now, this is important in any industry, but more so important in cannabis because not every insurance agency has experience writing cannabis and it is so unique to any other type of product out there on the market. As such it is extremely important that an insured company work with an agent that has done it before and knows what they’re doing. If you go with an agent that has not written a cannabis policy before, they won’t know what market to go to. They’ll send it out to their normal underwriters, just to find out that they all say, no.
Honesty is always the best policy
The second one is to be honest about your operations in every aspect. There are a lot of people who operate in the cannabis space and have operated in the black market for years. They are used to not necessarily disclosing all the information as it pertains to their business. So, when they start operating legally in the programs available in their states, it’s very important that insureds are completely honest about their operations and what they’re doing. If they’re not, they’re really jeopardizing if they’re going to have coverage in the event of a claim.
Be careful who you do business with
The third topic is to make sure that you are working with an insurance carrier that accepts cannabis businesses. Not only do you need to write a policy or work with an agent that understands cannabis, but you need to work with a carrier that is willing to insure a cannabis business. And what we have found is some agents don’t necessarily know what they’re doing in the space. As an example, they’ll write a dispensary as a pharmacy on a standard policy and not disclose that instead of selling medicine that’s federally legal, they’re selling medicinal marijuana. And if there’s a claim, there will be no coverage on that policy. If you are not disclosing that you’re working in the cannabis space and working with a carrier that accepts that you are jeopardizing your entire operation.
Read the fine print
As much as you hate to read lengthy legal documents, it’s extremely important that insureds are reading their policy. And if they’re not going to read the policy, they should hire an attorney that will. Because these insurance policies have very specific expectations on the insured that they must comply with for coverage to be in place.
Deciding on partnerships for your cannabis business is an important part of your organizational planning. Finding experts in their industry and those with experience can save you a lot of headaches and heartache. At Backcross Solutions we work with the best in industry and we can guide you in that journey. Contact us today to get started making your dreams come true.
To learn more about who to partner with for all your cannabis business needs, contact Backcross Solutions. For more information on cannabis specific insurance policies, contact Amanda Kugler at The Roots Insurance.