As more states legalize medical and recreational marijuana, and healthcare providers approve medical marijuana use for a broader range of conditions, the demand for cannabis continues to grow rapidly. In 2019, marijuana dispensary revenue grew 23%, making it the sixth-fastest growing sector in the U.S.
To keep pace with the growing demand, states are expected to approve licenses for thousands of new dispensaries and related businesses in the coming years, creating new economic opportunities. And with these new opportunities comes the need to insure against risk and protect these businesses.
But because cannabis is still illegal at the federal level, and laws can vary dramatically from state to state, it can make writing cannabis dispensary coverage more complicated than for most other types of retail stores.
Marijuana dispensaries tend to be cash-heavy businesses and carry products that are highly valuable on the black market, making them a favorite target for thieves. As states continue to approve the use of cannabis across the country, it is quite evident that all states are concerned about the exposure of theft and the potential to have stolen marijuana products enter the black market. Laws vary on a state-by-state basis, but the mandates for high-resolution interior/exterior cameras, off premise recording, safe requirements in respects to weight and fire rating, product storage practices, and burglar alarms are very strict and are required to secure a state-approved license.
Here are just some of the considerations that need to be taken into account when writing property coverage for a cannabis dispensary:
- Compliance with state regulations
- Security systems, including central station fire and police alarms, number, location and quality of interior and exterior cameras, and whether they record to an offsite facility
- Safe size and weight, and whether it is bolted to the floor
- The fire rating of the safe
- Product storage procedures, and amount of product stored onsite
- Gross business revenue
- Building fire rating
- Police and fire response times
- Area crime rating
- Other safety features
More than Just Casualty Coverage for Marijuana Dispensaries
The goal of property insurance is to protect businesses against real property, business personal property, improvements and betterments, and business interruption loss -- and to make them whole again when there is a covered loss so they can get back to running their businesses. That’s why Admiral’s Comprehensive Cannabis Program connects you with the expertise of Berkley companies through a single point of contact to offer a breadth of coverages tailored to the needs of cannabis dispensaries.
Previously, we’ve discussed the need for product liability insurance, in case customers sue the dispensary, claiming they became sick or injured because the dispensary sold a mislabeled product, or a product that contained unacceptable levels of pesticides or other foreign substances.
But there are other types of insurance that dispensaries can benefit from as well. One of the main features of our property coverage is equipment breakdown. This can cover business loss that results from equipment failures, which might include computers, cash registers, refrigerators, air conditioners, security cameras, and other equipment. Other insurance products include workers compensation insurance, which we are making available in many states, and insurance that covers employment practices, which can protect dispensaries against claims of violating equal opportunity or disability laws, wrongful termination, or similar claims.
As an industry leader in underwriting insurance policies for cannabis dispensaries and related businesses, Admiral strives to stay at the forefront of this rapidly evolving industry and deliver the insurance products businesses need to protect themselves.
If you are a wholesale broker in need of an insurance partner with deep expertise in the cannabis industry, contact us to become an appointed broker. If you are a retail insurance broker with clients such as marijuana dispensaries, cannabis product manufacturers or marijuana growers, we encourage you to connect with one of our wholesale partners.
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.