Risk Management Strategies for Cannabis Festivals and Events

Cannabis festivals are rising in popularity across North America. With the spread of legalization, it’s easier than ever for plant lovers and consumers to gather together and celebrate what makes cannabis great. But cannabis festivals, like any other festival, carry risk. And if your company isn’t adequately prepared for the risk of hosting a cannabis festival, you could wind up with a hefty bill if things go wrong.

Cannabis Festivals and Events: A Rising Trend

Cannabis events were once entirely underground. There were no corporate sponsors, ticket deals, or promotions — you either knew or didn’t. Things are different today in the states where weed is legal, which makes cannabis festivals all the more enticing to consumers.

Here, people and businesses can come together to enjoy the plant, sample edibles, try new strains of flower, and create community bonding over a shared love of the event. Cannabis events can look as wildly different as “alcohol events” look — the event could be centered around the plant entirely, or it may simply be an offering among other vendors, food, music, and entertainment options.

Cannabis festivals can also be a financial boon for the areas they’re hosted in. With big enough events, people will travel to attend and need lodging, food, and other essentials. The National Cannabis Festival in Washington, DC, draws thousands of attendees annually, some from the metro DMV area and others from farther away.

Potential Risks Associated with Cannabis Festivals and Events

But like any major event, there are risks associated with cannabis events. It’s not just about cannabis — although that plays into it. There are always risks with hundreds or thousands of people together in a limited space. Stoned participants may pass out, overheated people may get into arguments that escalate into fights, and municipalities have been known to pull the plug last-minute on events after discovering they involved cannabis.

The potential risks associated with cannabis events fall into four categories:

• Health and safety concerns. Some of these risks are part and parcel to any event – people getting dehydrated and needing medical attention, people over-imbibing and causing a scene — the list goes on. Working in cannabis doesn’t exempt companies from understanding the basic risks of hosting an event.
• Legal and regulatory risks. Cannabis is legal (in specific places), but that doesn’t stop the stigma from getting in the way. Be sure you understand all the rules and regulations for event centers and the municipalities they’re in. No company wants to cancel an event at the last minute (and issue refunds) because a town or county didn’t understand that cannabis was involved.
• Reputational risks. Events are fun ways to bring the community together – but they can also directly affect your business’ reputation. It’s all fine and well when the event runs smoothly — but what about when it doesn’t? The National Cannabis Festival took massive outrage from ticket holders in April 2023 when a torrential downpour and raging thunderstorm meant they had to evacuate festival grounds a mere two hours into the event. It would help if you always had a contingency plan for a worst-case scenario.
• Financial risks. Hosting events, especially cannabis festivals, is no small feat. A successful cannabis event takes months of careful planning, preparation, and money. Ideally, your company will make all of its money back and then some – but what happens if you don’t? Do you need to issue refunds? Do you need to cover someone’s medical costs?

Developing a Comprehensive Risk Management Strategy

You cannot cover an exposure you don’t know about. That’s why a comprehensive risk management strategy is essential for every cannabis festival and event.

A risk management plan for cannabis festivals is similar to one you’d create for your business as a whole but focused on just one event. You still need to go through the same steps of risk identification, evaluation, and control. (If this is your first event, you won’t have any past data to draw on for the tracking portion. If you host an event annually, tracking this data can help you plan better for future events.)

While there are many risks to hosting a cannabis festival, you can also take many steps to reduce or eliminate the potential of a risk occurring. No event, within or outside of cannabis, is ever risk-free, but you can set up precautions and safety nets.

• Health and safety risk: create an attendee safety plan. How big is your crowd expected to be? Ensure you have adequate crowd control measures proportional to the size of your attendance and proper first aid stations. Encourage responsible consumption among attendees, but be prepared to deal with the fallout of over-consumption. Dehydration is a significant concern for outdoor events, so ensure you have adequate places for people to get water to stay hydrated.
• Regulatory risk: ensure compliance. Check and then double-check that your event is in line with municipal regulations and state and federal laws. Ensure your permits are in order and everyone involved in approving the event understands that it involves cannabis.
• Reputational risk: crisis management plan. No one wants a festival to go sideways, but when it does, it’s too late to create a plan to deal with it. The best defense is a strong offense, so ensure you follow best practices, keep attendee safety at the forefront, and respond quickly if something goes wrong. Planning for the worst-case scenario is not invoking it — it’s preemptively dealing with it.
• Financial protection: cannabis event insurance. If you didn’t know your event needed or could have insurance, now you do. Cannabis festival insurance is a critical factor in a successful event to protect your bottom line if the worst happens. Cancellation insurance protects your sunk costs if you have to refund ticket holders, while public liability covers the cost if someone is injured while attending.

The Role of Insurance in Risk Management

There are multiple cannabis insurance policies you could choose to have in place for your events.

General Liability insurance

Also known as slip and fall insurance, this policy is crucial for cannabis events. If anyone gets hurt (whether by falling, dehydration, or over-imbibing) general liability can help your company cover the cost of medical treatment.

Event insurance

Event insurance is a lesser-known, short-term policy that can be customized to cover the unique needs of each cannabis event. Event insurance can be added to general liability to provide additional coverage for event-specific risks, such as public liability and cancellation insurance, which goes a long way toward protecting your bottom line.

Product Liability insurance

Product liability is crucial for anyone in the plant-touching side of cannabis, including events. If someone over-indulges, has a bad reaction, and blames it on the product, the event and hosting company could be named in a lawsuit along with the product brand.

Best Practices for Managing Risk at Cannabis Festival

• Plan ahead. If you don’t plan to succeed, you plan to fail. It’s a brutal but essential truth for companies — the best way to manage risk is by planning ahead. You have to identify risks and assess their likelihood to prepare for them, and this planning must be done far enough in advance that everyone on your team knows their role. Confusion is the enemy of action in crises.
• Communicate. Attendees to any event are taking risks by being there. Ensure that your company has adequately communicated the risk and best practices to avoid the risk. This could be reminders to stay hydrated during hot weather, warnings against over-consumption, or signing a waiver.
• Have a contingency plan. Also known as a crisis management plan, your team needs to know what to do if something goes wrong. This can range from a power outage or a medical emergency to inclement weather or an act of violence.
• Adapt. The risks associated with cannabis events can and do change over time. Once organizers had to fear getting raided and arrested, today, they need to worry about attendees getting dehydrated. Tracking your risks throughout multiple events can help you adapt as necessary.

By following these tips, festival organizers can help to ensure that their events are safe and enjoyable for everyone involved.

Case Studies of Successful Cannabis Events

The Emerald Cup is an annual cannabis festival in Oakland, California, focusing on flower quality, cannabis education, and advocacy. It’s been held for 20 years, and organizers have taken it from an underground event to one of the must-attend cannabis events in California. And yes, the event is fully insured.

This insurance paid off in 2019 when there was a fire at the event venue. Unfortunately, the blaze caused significant damage to the venue, but fortunately, the Emerald Cup was covered, and the event went off without further complications.

While this is a dramatic example of something going wrong, it highlights the need for comprehensive event insurance. The High Times Cannabis Cup and the Cannabis Business Summit — all successful events are backed by insurance, which protects the company’s bottom line from financial loss if something unexpected happens.

These events have comprehensive insurance policies covering a wide range of risks. This approach helps protect the events from financial loss in an unexpected event, such as fire,  theft, or a liability claim.

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 emailing [email protected] or calling 646-854-1093 for a customized letter of commitment or learning more about your cannabis insurance options.