Cannabis Industry Under Fire: The Rising Threat of Ransomware

What’s changing in the cannabis industry that’s made ransomware a bigger threat?

Regulatory Hurdles

The ongoing federal prohibition of the cannabis plant significantly limits the banking options of plant-touching businesses. Cash-based services were the standard for businesses like dispensaries for years (making theft a significant threat.) But in recent years, new digital options have opened up for cannabis businesses, which has increased their reliance on digital transactions — oftentimes without the safety net of a large financial backer, making these businesses attractive to ransomware groups.

Financial Allure

Despite the fact that over half of Americans live where cannabis is legal in some capacity, the plant and its products still carry a high value. Plant-touching businesses move high volumes of high-value assets on a regular basis — and that product value is before you factor in the added value of the information businesses have on their customers. Data is king on the dark web, where ransomware groups operate. The combined value of the cash flow moving through a business along with the customer data makes it an enticing option for cybersecurity threats.

Rapid Growth and Expansion

As businesses grow, their cybersecurity needs become more complex. If a business doesn’t have cybersecurity at the forefront of its risk management plan, potential vulnerabilities start to occur in its digital systems. The more complex an operation is, the more cybersecurity it needs and systems become increasingly complex with size. Rapid business expansion opens the door to potential oversights as employees juggle multiple jobs at once, increasing the possibility of human error that opens the door to ransomware groups.

Ransomware is one of the most financially burdensome types of cyberattacks. It’s right in the name — they want ransoms in exchange for access to your systems again. What happens if your business is the victim of a ransomware attack?

Financial Loss

The financial cost of a ransomware attack doesn’t end with the direct cost of the ransom payments — there’s also the indirect cost of system downtime, the cost of recovering your business data, and any legal fees you incur in the process (initiated or received.) All of this adds up quickly to a major bottom-line disrupter.

Operational Disruptions

Losing access to your devices and your operational software throws a wrench in even the most organized of machines, delaying all parts of your production. This has a downstream effect for all of your vendors and their clients, and a major disruption to manufacturing, production, or distribution can have negative effects on your brand’s reputation.

Regulatory Compliance Risks

Cannabis is a highly regulated industry and if you lose access to your devices, you lose access to regulatory compliance software. Not being able to log product movement in Metrc, track plant growth, or log COA results is not just bad for business — it’s falling out of compliance. Compliance enforcement agencies don’t take kindly to cyberattacks or businesses failing to meet security standards, and at worst, there could be legal consequences for your business.

You’re not fighting the good fight against cannabis industry ransomware and other types of cyberattacks alone. There are actionable steps you can take today and every day to ensure your business is protected.

Strong Cybersecurity Practices

All cannabis businesses need strong cybersecurity practices, no matter your profits or operational size. These practices are ongoing, with regular software updates to address bugs and patch any issues or errors that arise. Employees should be well-versed in these best practices, and annual training meetings help keep this priority top of mind. Additionally, following basic best practices like strong passwords, regular changes, and multi-factor authentication help keep your business’s digital assets safe.

Data Backup and Recovery

Don’t leave your data sitting in the cloud — regular backups of critical data are a crucial piece of strong cybersecurity practices. These backups should live offline, in a physical location you have access to. Data backups can happen daily or weekly, but no less than monthly.

Incident Response Plan

Don’t let the first time you consider what to do in a ransomware attack be when it’s happening. As part of a robust risk management plan, you should have cybersecurity incident response plans, a disaster management and recovery plan. This plan should outline clear guidelines for responding to ransomware attacks as well as a designated incident response team. This plan should be tested at least once a year, if not more, to ensure your entire team is well-prepared in the event of a cyber attack.

Cybersecurity Insurance

Cannabis cybersecurity should be a part of your cyber liability insurance coverage. Having a designed cybersecurity plan provides a safety net for your business, including financial coverage for ransom payments and assistance with data recovery costs and business interruption losses so you don’t have to cover the cost on your own.

In our digital age, cannabis cybersecurity is an ongoing task for all businesses — especially in the cannabis industry. Sadly, ransomware is a growing type of attack on cannabis businesses, so ensuring that you and your bottom line are protected is vital to building long-term business success.

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.