CRB Cannabis-Related Businesses
The growing legalization and the number of dispensaries across the country continue to grow, and the normalization of adult use of medical and hemp-derived cannabis across the nation. Legal concerns aside, cannabis companies operate like other businesses and face almost the same exposures as most enterprises. The top risks cannabis businesses encounter are:
- Distribution- Current regulations prevent products from one state from being transported to another state.
- Natural disasters- including wildfires, storms, and flooding, can easily damage crops.
- Cybersecurity- Because of the type of information that cannabis companies handle, they can also become prime targets for hackers. Have your cyber needs assessed and know your risks and how to protect your business.
Ensure you understand the Laws and Regulatory issues, compliance varies from state to state, and laws are frequently changing. Be aware of your state’s resources, information, and programs.
Marijuana is gaining acceptance in the U.S. as more states legalize the drug. But we are just beginning to understand the variety of benefits and risks associated with it. There is a lot to unpack here; if you want coverage you need to do your research first!
If you are entering into the cannabis industry or have, you must have Insurance. It’s important to know what to expect when insuring your cannabis-related business.
What is Dispensary Insurance?
Insurance for cannabis-related businesses refers to policies that protect the business against risk. Dispensaries, cultivation centers, and testing labs require different levels of coverage and liability.
What dispensary owners should know before seeking Insurance. You need full details of the business and location to receive a quote. The insurance applications will ask questions on the location, renovations, ownership details, payroll, and sales numbers with estimated annual sales projections.
Different From Other Forms of Business Insurance, Dispensary Insurance.
Non-hemp-derived cannabis is a schedule one controlled substance under the Controlled Substance Act. Liability policies and other options can be costly. Cannabis insurance is expensive due to the risks associated with being considered a potential retailer of a controlled substance; liability policies and other options can be costly.
The cash-only business makes ensuring dispensaries more costly.
Dispensary insurance differs from other brick-and-mortar retail insurance. Additional states are legalizing medicinal and recreational marijuana. Insurance carriers have begun to open risk acceptability. Marijuana is federally illegal; businesses have difficulty getting quotes from different carriers.
Types of Insurance for Cannabis-Related Businesses
It is important to remember that CRBs are at risk for many things: workplace accidents, damage to property, theft, general liability, and product liability. Most dispensaries work on a cash-only business model until Congress approves the Secure and Fair Enforcement SAFE Banking Act. CRBs handle large amounts of cash, putting them at risk of theft and liability. CRB insurance can vary in price, depending on the type of business and policy.
These are some of the common types of Insurance for CRBs and their coverage:
- Commercial property: damage to business-owned property.
- Crop: costs associated with damage to seeds and plants.
- General liability: bodily injury, property damage, reputational harm, and third-party claims.
- Inland marine: theft of business-owned property in transit or damage.
- Professional liability: third-party accusations, mistakes, and negligence.
- Workers’ compensation: employees’ lost wages due to injury, illness & medical bills.
Secure cash handling
The Emerging Markets Coalition (EMC) and the National Association of Cannabis Businesses (NACB) have formed a strategic alliance to develop a National Standard for Cash Management for the cannabis industry. The U.S. legal cannabis market is projected to grow to $35B by 2025, yet operations in licensed cannabis companies are still cash-based.
The new National Standards for Cash Management provide peer and expert-reviewed cash management tools and protocols that cannabis-related businesses need to incorporate in their operations to be as efficient and safe as possible in today’s regulatory environment while also preparing to work with financial institutions when current legislative, and regulatory barriers are lessened or dropped.
The standards include but are not limited to, best practices in areas such as:
- Personnel background checks, skill set, and training requirements
- Cash handling at the point of sale, vault, and transport
- Security controls for POS end-of-day balancing to sales receipts
- Security controls for cash storage
- Techniques for optimal staff coverage for both customer service and security
- Optimal cash levels in the vault and point-of-sale stations
- Payments to staff, vendors, and tax authorities
- Currency transaction reporting – Review the guideline amounts in the National Standard for Cash Management for the Cannabis Industry (NACB): nacb-10-cash-management.pdf
This document is not meant to provide legal or accounting advice – rather provide industry standards and best practices for prudent cannabis businesses to follow. Please contact your attorneys, accountants, and insurance providers for their counsel specific to your business.
Premiums are based on sales, actual or projected. An audit will be conducted for the prior term to confirm the information from the insurance application. The audited discrepancy will adjust in the next term’s sales figures. The best thing dispensary owners should do is be honest about their projections. Dispensary insurance will be placed through an excess & surplus market, which does not provide traditional discounts.
Navigating premiums can be a detailed process.
The growing legalization and the number of dispensaries across the country continue to grow exponentially and the normalization of adult use of medical and hemp-derived cannabis across the nation.
The U.S. cannabis market was valued at 10.8 billion dollars. In 2021, with an expected annual growth of 14.9% annually and a sign of what is to come. The development shows the growing plant acceptance for medical and adult use reasons.
With growth comes a greater need for insurance providers, opening the possibility that these two industries will grow in tandem. Insurance providers remain cautious as the fate of federal and local cannabis laws is still in flux.
Are There Limited Carriers that Issue Dispensary Insurance?
Every CRB Cannabis-Related Business needs Insurance like any other business or company. The cannabis industry is still a limited insurance market, with insurers willing to provide Insurance constantly, exiting and entering the market. The overall capacity and variety of policies that cover different types of risks are limited. CRB insurance can be challenging. Cannabis with THC is federally illegal (excluding hemp-derived cannabis products containing less than 0.3% THC). Insurers can negate coverage when a loss or claim occurs.
Before beginning shopping for Insurance, have all your licenses and comply with all regulations and requirements from the state. Additionally, consider different coverage options. A business needs general liability insurance. Insurance companies can also consider covering business property, including inventory, betterments, and improvements to a rented space. When shopping for Insurance, have your agent reviews the different coverage options available for your business.
Legal concerns aside, cannabis companies operate like other businesses and face almost the same exposures as most enterprises. Here are the top risks cannabis businesses encounter, according to experts.
- Distribution- Current regulations prevent products from one state from being transported to another state.
- Natural disasters- including wildfires, storms, and flooding, can easily damage crops.
- Cybersecurity- Because of the type of information that cannabis companies handle, they can also become prime targets for hackers.
Understand the Laws and Regulatory issues, compliance varies from state to state, and laws are frequently changing. Be aware of your state’s resources, information, and programs.
OHIO’S OFFICIAL RESOURCE FOR THE MEDICAL MARIJUANA CONTROL PROGRAM
House Bill 523, effective on September 8, 2016, legalized medical marijuana in Ohio. The Ohio Medical Marijuana Control Program allows people with certain medical conditions, upon the recommendation of an Ohio-licensed physician certified by the State Medical Board, to purchase and use medical marijuana.
Three state government agencies are responsible for the operation of Ohio’s Medical Marijuana Control Program:
OHIO DEPARTMENT OF COMMERCE
The Ohio Department of Commerce is responsible for overseeing medical marijuana cultivators, processors, and testing laboratories.
STATE OF OHIO BOARD OF PHARMACY
The State of Ohio Board of Pharmacy is responsible for overseeing medical marijuana retail dispensaries, the registration of medical marijuana patients and caregivers, the approval of new forms of medical marijuana, and coordinating the Medical Marijuana Advisory Committee.
STATE OF OHIO MEDICAL BOARD
The State Medical Board of Ohio is responsible for certifying physicians to recommend medical marijuana and may add to the list of qualifying conditions for which medical marijuana can be recommended.
The Ohio Medical Marijuana Control Program Toll-Free Helpline responds to inquiries from patients, caregivers, and health professionals regarding adverse reactions to medical marijuana and provides information about available services and additional assistance as needed. The contact line: 1-833-4OH-MMCP (1-833-464-6627)
Have a question? Learn more about Ohio’s Medical Marijuana Control Program.
- Medical Marijuana Businesses
https://www.medicalmarijuana.ohio.gov/cultivation.aspx
- Patient & Caregivers
https://www.medicalmarijuana.ohio.gov/patients-caregivers.aspx
- Physicians
https://www.medicalmarijuana.ohio.gov/physicians.aspx
OHIO’S OFFICIAL RESOURCE FOR THE MEDICAL MARIJUANA CONTROL PROGRAM
Use the links below to find more information on Ohio’s Medical Marijuana Control Program.
FREQUENTLY ASKED QUESTIONS: Ohio Medical Marijuana Control Program
https://www.medicalmarijuana.ohio.gov/faqs
Medical Reactions
The Contamination Argument: Automation Limits Human Error & Contamination Risk and Improves Product Safety
Our industry demands stringent safety standards. Our customers deserve safe products, but beyond that, the testing requirements mandated by regulations in most markets are very strict. Every human touchpoint in your processes carries with it additional contamination risk. Even with stringent protocols, mold, mildew, and other unwanted crits can more easily venture into final products as the human variable increases.
Automation minimizes these risks, improves the product’s safety for consumers, and reduces the risk of recalls or other regulatory issues. Consider that for many cannabis businesses in hyper-saturated, competitive markets; a significant product recall can be the end of the road. Automating production processes provides a reliable and consistent solution in an industry that demands the highest safety and quality standards. https://cannabisindustryjournal.com/feature_article/rise-of-the-machines-the-case-for-automation-in-the-cannabis-industry/
What is CHS?
CHS cannabinoid hyperemesis syndrome affects people who use high doses of marijuana daily over an extended period. Now, experts believe that overstimulated receptors can bind with cannabinoids, which cause CHS.
Most people do not think of cannabis as making you violently ill. Still, some people develop this condition after consuming high concentrations of cannabinoids. This rare illness is being reported far more often with the legalization of marijuana, higher potency, and a greater variety of cannabis products, from vaping to edibles. CHS cannabinoid hyperemesis syndrome affects people who use high doses of marijuana daily over an extended period.
Frequently asked questions: Frequently Asked Questions (cdc.gov)
The U.S. Food and Drug Administration (FDA)external icon
CBD can alter the effects of other drugs.
CBD has the potential to interact with many other products, including over-the-counter medications, herbal products, and prescription medications. Some medications should never be taken with CBD; the use of other medications may need to be modified or reduced to prevent serious issues. The consequences of drug interactions also depend on many factors, including the dose of CBD, another medication, and a person’s underlying health condition. Older adults are more susceptible to drug interactions because they often take multiple medications and because of age-related physiological changes that affect how our bodies process medications. Talk to your doctor or pharmacist if using or considering CBD.
CBD and other medications: Proceed with caution – Harvard Health
Medical Marijuana and its Impact on BWC Ohio Bureau of Workers’ Compensation
What does OHIO’S medical marijuana LAW SAY? In 2016, the Ohio General Assembly established the framework to legalize medical marijuana in Ohio, effective Sept. 8, 2018. It was approved for certain medical conditions, including chronic pain or O.H. severe or intractable, PTSD, and traumatic brain injuries. The only legal forms of medical marijuana are edibles, oils, patches, plant material, and tinctures. Vaporization is permitted. It cannot be smoked or combusted. Home growth is prohibited.
The Ohio Department of Commerce is tasked with regulating the licensure of medical marijuana cultivators and processors and the laboratories that test medical marijuana. The state of Ohio Board of Pharmacy will license retail dispensaries and register patients and their caregivers. Additionally, the State Medical Board of Ohio will regulate physicians’ requirements and procedures for applying for and maintaining certificates to recommend medical marijuana and maintain the list of conditions for which medical marijuana can be recommended.
The impact of the new law on BWC and its programs is limited. It does not adversely affect the Drug-free Safety Program, will not require BWC to pay for patient access to marijuana, and expressly states that an employee whose injury resulted from being intoxicated or under the influence of marijuana is not eligible for workers’ compensation.
https://www.bwc.ohio.gov/downloads/blankpdf/MedMarijuanaImpact.pdf
Please review with your client before looking for insurance markets, verify licenses, and ensure that they comply with all regulations and requirements from the state. Consider the different coverage options available for the business.
Understand the Laws and Regulatory issues, compliance varies from state to state, and laws are frequently changing. Be aware of your state’s resources, information, and programs.
Marijuana is gaining acceptance in the U.S. as more states legalize the drug. But we are just beginning to understand the variety of benefits and risks associated with it. If looking for coverage, do your research first.
References:
A Guide to Dispensary Insurance
By Itali Heide
OHIO’S OFFICIAL RESOURCE FOR THE MEDICAL MARIJUANA CONTROL PROGRAM
https://www.medicalmarijuana.ohio.gov/
Ohio Bureau of Workers Compensation BWC
https://www.bwc.ohio.gov/downloads/blankpdf/MedMarijuanaImpact.pdf
MedMarijuanaImpact.pdf (ohio.gov)
ABC Nightline Report
CHS cannabinoid hyperemesis syndrome, prolonged marijuana use: Nightline June 8th 2023
CASH MANAGEMENT STANDARDS – NACB
WebEMC/NACB CASH MANAGEMENT STANDARDS V 3 0 6 . 2 2 Attributions The Emerging Markets Coalition (EMC) and the National Association of Cannabis Businesses (NACB) …
https://nacb.com/wp-content/uploads/2022/04/nacb-10-cash-management.pdf
https://www.cdc.gov/marijuana/about.htm
Rise of the Machines: The Case for Automation in the Cannabis Industry
May 17, 2023 By Kyle Louck
CBD can alter the effects of other drugs.
Harvard Health Publishing Harvard Medical Schol
January 11, 2021
By Katsiaryna Bykov, PharmD, ScD, Contributor
CBD and other medications: Proceed with caution – Harvard Health
