Navigating the Maze: A Guide to Choosing the Right Cannabis Insurance for Your Delivery Business

Working in cannabis means working in an industry ripe with opportunity. But as an emerging market, there are also risks to consider. Understanding how to properly cover your exposures and manage your risk is key to setting yourself up for long-term success.

• Property & Inventory: The street value of cannabis and the cash-heavy nature of the industry make delivery businesses a target for theft. Working on the road with vehicles of all sizes also opens the risk for product damage during transportation or worse, product spoilage.
• Product Liability: Without federal oversight or regulations, product liability in the cannabis industry can fall on any business that has touched a product in the supply chain, opening the door to lawsuits from customer injuries or illnesses from allergies or incorrect labeling if your company delivers the product to them.
• Employee Issues: Any business that has employees incurs the risk of accidents or on-the-job injuries and worker’s compensation claims. But in cannabis, businesses also have to be proactive against theft by employees.
• Crime & Vandalism: As mentioned above, cannabis is a cash-heavy industry dealing with products that can have a high street value. Plant-touching businesses may face an increased risk of crime and vandalism because of this.
• Regulatory Issues: The regulations that govern cannabis can be confusing and subject to change, which increases the risk of facing fines or legal fees if you find yourself in non-compliance with licensing and transport regulations.

Cannabis delivery companies face unique risks doing business in an evolving landscape. But as the industry matures and changes, so too do the offerings for cannabis and delivery insurance.

• Limited Market: The federal prohibition on cannabis can make insurance carriers wary of entering the space or offering cannabis-specific coverage because it’s higher risk than in traditional industries. This is slowly changing, but be aware that many insurance companies are unfamiliar with the complex landscape of cannabis insurance.
• Rapidly Changing Laws: The evolving regulations that present challenges for businesses to remain in compliance do so as well in insurance. Policies in cannabis must adapt to fit evolving legal frameworks, which can be difficult and present a challenge for underwriters.
• Varying Coverage Options: Just because an insurance carrier offers insurance to cannabis businesses doesn’t mean they understand the nuances of the industry or the specificities of cannabis insurance policies.
• The Role of Brokers: Brokers can act as a guide through the maze of cannabis insurance. Cannabis-specific brokers have a deep knowledge and understanding of the cannabis industry and the world of insurance.

Every cannabis delivery business has a unique umbrella of needs based on factors like location, size, and annual income, but there are policies that are best practices to have, no matter where you operate.

Essential Coverages

Important for all cannabis businesses to have.

• General Liability: If you delivered a product to a consumer that was mislabeled, you could find yourself liable. This policy offers protection against product liability claims and other third-party lawsuits.
• Property Coverage: Cannabis delivery services are targets for theft in every market across the country. A property insurance policy protects against theft, damage, or loss of inventory and equipment.
• Crime Coverage: Property and crime coverage go hand-in-hand. Crime coverages offer protection against losses due to robbery, burglary, and employee dishonesty.
• Cyber Liability: In today’s digital world, cyberattacks are a matter of when, not if. This policy gives coverage for data breaches and cyberattacks.

Delivery-Specific Coverages

Necessary policies for plant delivery businesses.

• Commercial Auto: This policy provides comprehensive liability coverage for accidents involving company delivery vehicles — a must for businesses with people on the road.
• Errors & Omissions (E&O): Sometimes called professional liability coverage, E&O policies provide protection from professional negligence claims or legal disputes from professional services delivered.
• Transit insurance: This policy extends cargo insurance to include any property in transportation so you’re protected on the road.

Working with a cannabis insurance broker is having a professional guide through the maze of cannabis insurance.

The Broker’s Role

A broker helps you identify the best umbrella of insurance coverage for your cannabis delivery business. This includes getting quotes from multiple companies, negotiating the most favorable terms, being your go-between for the insurance company, and handling claims if and when they arise.

Required Information for a Broker

A broker needs to have all of the details about your business operations, from your fleet size and the types of products you deliver to your team and annual revenue. All of this information impacts your insurance quotes, so don’t leave anything out.

Red Flags to Know

Not all brokers are equally suited for the cannabis industry! If a broker isn’t able to send you multiple quotes, or the quotes have limited coverage, exclusions, and high deductibles, it’s worth shopping around to find a broker who understands this space better.

The best defense strategy is a good offense. Keeping your insurance costs low means reducing your claims, and managing your risk well.

• Driver Training: Implement comprehensive driver training programs to minimize accidents. Ensure your drivers are up-to-date on the rules of the road, the size and limitations of their vehicle, and always comply with road safety best practices.
• Security Measures: Many insurance policies for cannabis require safety measures to reduce the risk of internal and external theft. Common terms include having secure storage facilities, securing your delivery vehicles during off hours, and having secure cash-handling procedures.
• Compliance Management: Understanding regulations isn’t a fun task for any business owner — but it is necessary to ensure your business remains in compliance. A quarterly or annual review of cannabis delivery regulations and licensing requirements can ensure you don’t face any costly fees.
• Regular Policy Reviews: Review your insurance policies annually to ensure coverage remains adequate. Businesses evolve and change, which is a good thing — but your coverage has to evolve alongside to keep you protected. Annual policy reviews help keep you (and your broker) up to date on your business.

You don’t have to navigate the maze of cannabis delivery insurance alone!

Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by email [email protected] or calling 646-854-1093 for a customized letter or learning more about your cannabis insurance options.