If you’re starting a cannabis business, you probably have a plan and a to-do list. One thing that needs to be on it is cannabis business insurance. While all business owners know they need protection, the potential time and money drain can be offputting. Next Insurance surveyed 30,000 small business owners and found that 44% did not have insurance.
There is a myth that insurance companies will not provide coverage to cannabis businesses. This is not necessarily true, some companies will work with cannabis businesses. This article will review the types of business insurance you should consider and what to prepare before meeting with a broker.
What are the most important types of insurance for a cannabis business?
Depending on the type of cannabis business you have, e.g. grow operation, extraction, dispensary, a business may need a combination of one or more of the following types of insurance.
General Liability Insurance: protects a business from the financial costs of property damage or bodily injury, for example, if somebody hurts themselves on your property.
Professional Liability Insurance: protects the work a business does and any mistakes that might occur.
Business Property Insurance: Protects the physical location that your business owns or leases, as well as properties, tools, and inventory.
Business Income Insurance: Replaces lost income when you are unable to conduct business due to a covered loss like theft or fire.
Cyber Liability or Data Breach Insurance: Critical to consider in this digital age. With it, your business would be covered in the event of a data breach or loss of digital property.
It is usually worth getting a higher deductible, to make your premium less expensive, and taking on more risk yourself, but pay less every year.
What do I need to prepare before purchasing an insurance policy?
CUE Cannabis spoke with Gwen Jaques, an Insurance Agent with 22 years of experience. She says insurance has always been complicated and business owners need to be prudent to ensure they are getting the right type of coverage. Jaques recommends gathering together all business documents as you prepare for the conversation with an agent or broker. Essential documents include:
- Business Tax ID Number and Entity Set up
- Gross Receipts
- Number of employees or subcontractors
- A list of business assets such as equipment
Organize the important details of your business, and once you are ready with all this information, go online to find a broker that specializes in small business insurance, or contact insurance companies directly to discuss their small business policy.
What cannabis business owners usually consider when setting up a business?
There are two things that businesses don’t usually consider when setting up a shop, and both of these concerns the future success of the business.
The first is to consider insurance that will protect the future of the business. Jaques says that many business owners don’t see the need for something like a partnership agreement until the business hits a rough patch. “Say your partner dies unexpectedly, who is going to take over their share of the partnership?” Many insurance and online legal sites offer the necessary partnership agreements that mean the business keeps running smoothly if you’ve hit success and need such an agreement to prevent future problems.
Another type of insurance business owners should consider is part of employee benefits. Providing health insurance, dental, 401K plan, and a smooth HR onboarding experience is an important part of employee retention. Read more about how easy it is to set up health insurance for employees.
The final resource business owners need to improve the future running of their business is the best business software. Like having insurance, the right software can save time and money in the future, and support the growth of your business. Products such as accounting, a website, a business email, and data security that are specifically designed for cannabis businesses, keep everything running smoothly. Our Experts can help you find the right software for your business.