In 2020, Admiral launched our Comprehensive Cannabis insurance program, which allows Admiral Brokers access to a breadth of coverages tailored to the needs of the cannabis industry. Our objective was to offer broad coverage for dispensaries, cultivators, and growers. While phase one has been dispensaries only, an initial concern in writing a successful cannabis dispensary book of business was to guard against theft. The cannabis industry is growing fast, and cannabis in all forms is undoubtedly a high target item for theft.
Let your cannabis dispensary clients know that they must follow the established state laws. Each state mandates specific security measures necessary for a dispensary to obtain and maintain their license. These rules often require central station burglar alarms, high-resolution interior cameras, high-resolution exterior cameras, motion sensors, regulations on how long to retain video footage, where cameras need to be positioned, safe/vault requirements, panic alarms, and more. Knowing that their cannabis is such a high target item, many dispensaries employ armed or unarmed guards, use shatterproof display cases, place bars over windows and doors, invest in metal roll-down shutters and other means to keep their product safe and keep their paying customers happy.
The accounts I’ve seen show an increase in loss activity, and the date of loss has generally been around May 30th, when the streets of many cities were filled with protesters. A few of the losses were quite unpleasant but manageable, with damage limited to their point of entry plus general contents that were out for sale, such as T-shirts, hats, bowls, bongs, and other paraphernalia. But the larger losses that I’ve witnessed have been quite painful and have come at the direct expense of the insured.
Many carriers have an exclusion or sub-limit for the amount of unsecured stock on site. The insured will still have the damage from the physical break-in and theft of general contents, which should be covered on their policy, but what about the cannabis stock? If an insured has $250,000 in stock coverage and places $150,000 back in the safe/vault at the close of business, that remaining $100,000 is exposed--very exposed. If the policy had a $50,000 theft sub-limit, the insured would be responsible for that remaining $50,000 of unsecured cannabis stock, plus their deductible. When questioned, the common response to this type of loss has been that the insured has learned their lesson and now they’ll place 100% of their cannabis stock back in the safe/vault at the close of business. But the damage is done, and it could cost the insured their license as the state does not want to see this product out on the streets.
Even without the protests, the insured has generally made a significant investment to purchase a safe and/or vault, and they should be utilized to keep their stock secured. By leaving their cannabis product out of the safe/vault, they certainly increase their odds of becoming marked for theft. Follow the rules and take the extra 5 minutes to secure the cannabis per state guidelines. Those 5 minutes could help the insured maintain their license, keep their product safe, keep their customers happy, and it could save them tens of thousands in loss dollars.
Our Comprehensive Cannabis insurance program makes it easy for dispensary owners to get the coverage they need in one place, whether they are a new business venture or an established dispensary owner. Our experts can help personalize each insurance plan to meet the needs of each individual business, with coverage for:
Products and services described above are provided through various surplus lines insurance company subsidiaries of W. R. Berkley Corporation and offered through licensed surplus lines brokers. Not all products and services may be available in all jurisdictions, and the coverage provided by any insurer is subject to the actual terms and conditions of the policies issued. Surplus lines insurance carriers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.