Cannabis Manufacturers Insurance in Minnesota
Manufacturers operating in the legal marijuana sector face innumerable risk exposures related to things like motor vehicle accidents, bodily injuries and property damage. In order to protect themselves effectively, it’s important for businesses to have a basic understanding of the most common exposures and secure the proper insurance coverage for their needs.
Sebrite Agency, Inc. is here to help cannabis manufacturers navigate these exposures and secure a commercial insurance portfolio that’s tailored to their needs. Call us at 800.366.6466 or request your free insurance quote online today.
Why Cannabis Manufacturers Insurance?
Wherever you fall in the cannabis manufacturing sphere, there are a variety of product liability concerns to consider. Edibles, vaporizers, pesticides, breaches of warranty, misrepresentation, label claims and deceptive practices all present a real risk of litigation, even for a cautious business. Appropriate insurance benefits will be there to help you through these challenges.
These risks can generally be broken into three main areas of risk:
Product contamination—In the event that a consumer experiences adverse health effects or illnesses after using cannabis, your company can be held liable. For those that sell edibles, customers can easily experience food poisoning or similar conditions from tainted products. For those that sell vaporizers or other smoking products, you could be sued following issues of contamination, product mislabelling and misrepresentation. What’s more, contaminated products can cause long-term health effects, increasing the cost to your business. Further complicating matters, in the event of an expensive recall and without the proper protections in place, your organization may be left without financial recourse.
First-party claims—First-party claims are common for nearly all organizations that sell goods or services. However, due to the mind-altering nature of cannabis, your business is particularly at risk. Product liability claims related to accidents, injuries, product defects and similar losses are increasingly common in the cannabis industry. And even just one claim can have a lasting impact on your bottom line.
Third-party claims—Third-party claims are particularly troubling, as your business can be held responsible for accidents even if you aren’t directly at fault. In the event that one of your customers gets into an accident, you may have to recoup the costs should they cause property damage or bodily injuries to a third party.
To properly address these risks and more, it’s critical that organizations not only produce high-quality and safe products, but secure the right insurance as well.
What Unique Coverage Do I Need?
The cannabis business can be particularly challenging, making it all the more important for organizations to secure policies that are right for them.
If you grow your own marijuana, crop insurance can protect against potential damage or disruption that could occur during the production cycle. Depending on the policy, some or all stages of the growth cycle are covered.
Harvested Plant Material: Mature, harvested plants that are not yet ready for sale.
Finished Stock: Mature, harvested plants that have been processed and are ready for sale.
Policies vary on the limits of coverage, but most do not protect against losses caused by the inabilities of growers to properly cultivate cannabis or seizure or damage resulting from the actions of a government agency. Most policies will require an inspection of the growing facilities to identify any potential hazards that could increase the chance for a loss. It is also common for policies to require that a there be an operating security system installed at the facility.
No matter how rare the occurrence, there is always the possibility that someone could become ill from ingesting an edible cannabis product they purchased from you. This could result in them taking legal action. Product liability coverage will protect you from damages and legal fees in the event that one of your products causes harm to its user. Product liability cover usually requires the manufacturer of such products to comply with all state health codes involving food production and may also require some additional contingencies to ensure a quality product is offered to the customer.
Even in states where marijuana is legal, individual counties or cities can have their own regulations in place. In many areas, the right to distribute marijuana stands on shaky legal ground that can create an unsure future for dispensary owners. Because of this complicated legal situation, it is not out of the question for city or state agencies to raid dispensaries or growing facilities even when their owners are operating within the constraints of the law. Raids can be a major disruption to your regular business operations as they can involve property damage, seizure of product and equipment, and even the possible arrest of you or your employees.
Raid coverage helps owners recoup their losses, including any related legal fees, after a raid as long as the charges against them are dropped or if they are acquitted or found not guilty. The policy does not activate if the policyholder is found guilty of any of the crimes that prompted the raid. Raid coverage is offered at a state level for those states where marijuana is legal. Policies cannot cover damages caused by federal raids—from agencies such as the DEA—as marijuana, for medical use or otherwise, is still considered illegal on a federal level.
Get the Help You Need
To learn more about your business’s unique risks and to secure the appropriate protection, contact an experienced insurance broker at Sebrite Agency, Inc. today.