When applying for a cannabis dispensary license, protecting your investment with the right cannabis insurance policy is an important, yet often overlooked, step. This guide helps dispensary owners find an optimal insurance policy for their retail business.

You’ll learn:

• What is cannabis insurance?
• What to look for when evaluating providers
• How to purchase the right policy for your business

First thing’s first:

What is cannabis insurance?

Workplace injuries, property damage, crop failure, theft, and more.

Cannabis insurance is a type of business insurance policy customized to address and minimize the risks associated with working in the cannabis industry.

What to look for when evaluating cannabis insurance providers

Since the cannabis industry is still moving through the complexities of federal law, only a select few understand state business requirements and the role they play in the cannabis sector.

Plus, in states where cannabis legality is still in its infancy, it’s hard to determine which insurers can provide services—and if their coverage is fully reliable. That means it’s up to you to investigate a provider before accepting them as your covering agency.

Confirm the broker has a great reputation among others in the industry and is rooted in the cannabis ecosystem. Talk to an agent and feel them out. Do they know what they’re talking about? Are they familiar with the type of questions you’re asking? How long have they been in the business? Always go with your instinct. And shop around—the best agencies will be transparent in what they can (and can’t) do for you.

To ensure that you find a trusted carrier who will lock down the perfect cannabis insurance coverage for you, here are a few questions to consider:

1. Do they know the right questions to ask?

As a dispensary owner, you might not know all the trade words, lingo, or questions to ask a carrier. That's OK! A well-rounded cannabis agent or consultant will. A knowledgeable cannabis insurance agent should have a firm grasp on how to talk to both clients and carriers on key points of coverage like product liability, workers compensation, business auto, and other different policies from seed to sale.

2. Do they have cannabis industry experience?

Look for agents who have successfully sold cannabis insurances to a wide array of cannabis businesses. An average agent might know little or the specific coverages necessary for your business. Your agent should be your advocate in finding the best insurance carrier for your needs.

3. Do they offer a wide range of coverage options?

The insurance needs of cannabis business owners can be highly diverse because there are multiple types of businesses, one size does not fit all. For example, a dispensary will not benefit from crop coverage unless the business is also involved in the cultivation, but a cannabis grower will be wise to invest in crop coverage. Make sure the insurance agency you’re considering has different coverage options to cater to your specific business model, coverages such as:

• General and Product Liability
• Business Auto Coverage
• Property and Crop Coverage
• Workers Compensation
• Cargo Protection
• Equipment Breakdown Coverage

How to purchase a cannabis insurance policy

Our simple guide will help you find the best-fit insurance policy for your dispensary in just five steps.

1. Find an insurance broker

As we discussed above, your insurance broker should be someone who inspires confidence and will be a trusted business partner who can help you make informed business decisions. 

They should have deep knowledge of insurance as it relates to the cannabis industry, in addition to demonstrating going the extra mile to find the best products—and provide you with upfront details about what's not covered (AKA exclusions).

2. Identify the right insurance products for your cannabis business

Once you decide on a cannabis insurance partner, you'll want to pinpoint the most important products and coverage you'll need as an operator in the cannabis sector.

Identify the processes, contract language, security systems, and other activities you can pull from that complement your insurance products. Creating a holistic risk mitigation strategy to protect your business can help reduce your overall insurance price.

Most dispensaries start with these four basic types of coverage:

• Property Liability: Covers damage from theft, fire and most weather occurrences.
• General Liability: Protection in the event a 3rd party (someone outside your business) is injured on your property. Also covers their personal property if it’s damaged as a result of your operations.
• Product Liability: Protection if injury or damage is caused to a third party (or their property) due to a defective product.
• Workers Compensation: Covers medical costs and lost wages if your employee is hurt or becomes ill from a work-related injury or accident.

You might also want to consider Employment Practice Liability and Cyber Insurance. Regardless, all options can (and should) be reviewed with your insurance broker in order to select the ideal policy for your business.

3. Send out quote applications

Next, begin firing off quote requests for the various insurance products you're interested in.

Quotes are free, so it's worth completing the application for all relevant products. You'll make your decision once you've gathered prices from multiple brokers and have a thorough understanding of what a given product does (or does not) cover.

4. Analyze quotes and make a decision

On average, quotes take about 5-10 business days to come back—assuming all information collected is sufficient for the carriers to price your product. In some cases, carriers need additional information, so the process can take longer.

Review all quotes with your broker and make sure you categorize them by:

1. Price: Which quotes fit your budget, while offering the protection you need for peace of mind?
2. Coverage: Make sure you understand your coverage limits, and if they are per event or for the policy period.
3. Exclusions: This is one of the most important things to understand. Not all insurance carriers pay out for the same claims. Know what they are, and make sure you understand the true price you're paying for the exclusion.

While not common, in some cases, brokers can negotiate with the carrier to remove an exclusion.

5. Purchase your policy

Once you decide to buy, your broker will tell you how you can pay for your policy.

Some brokers offer the option to pay in installments rather than a bulk one-time payment. This is an attractive option for smaller and newer cannabis businesses that may be budget-conscious.

Bonus step: partner with Dutchie

Ready to talk to a cannabis insurance expert today?

‍Dutchie Insurance is our full-service insurance agency that caters exclusively to the cannabis industry and is focused on providing the most competitive, best-fit coverage options for dispensaries in the United States.

Our insurance programs are designed to support the full spectrum of any cannabis business, from seed to sale—including cultivation, processing, wholesale distribution, and retail. We partner with industry-leading insurance carriers who have access to insurance solutions designed exclusively for the cannabis industry.

To learn more about Dutchie Insurance, contact our team of in-house cannabis insurance experts today.

*Dutchie Insurance is currently only available in the U.S.

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