Important Insurance Coverages for Your New Jersey Cannabis Business
Cannabis dispensaries are popping up all over the country as more and more states legalize marijuana. New Jersey is one of the latest to join the list of states that allow small amounts for personal use. Aside from being good news for cannabis consumers, this also creates a new industry that needs to be properly insured. So far, there are several officially licensed dispensaries in NJ, and that number will undoubtedly grow as time goes on. If you have any interest in the market, you’ll first want to explore your options for dispensary business insurance.
What Is Dispensary Insurance?
Marijuana dispensary coverage is designed to protect businesses that sell cannabis, hemp, and related products. It can cover things like product liability, property damage, and even employee theft. Dispensaries need to be aware of the unique risks they face and make sure they are properly protected.
Since hemp, marijuana, and CBD companies are typically not huge international corporations, they do not have the financial backing or protections in place that larger companies do. Would you be able to recover monetarily if your shop burned down, something seriously got in the way of your suppliers' latest crop delivery, or someone broke into the dispensary and stole your products? In the vast majority of cases, the answer would be "no." That is where hemp business insurance comes into play.
Dispensary insurance may offer protection for both the actual products and lost funds associated with the inability to sell to recreational or medical clients due to a covered event. It also gives you protection against lawsuits in case a disgruntled or dissatisfied customer claims some type of damage from your products. Each policy can cover quite a wide variety of things, so it is best to discuss your options with a New Jersey Trusted Choice independent insurance agent. You may opt for a combination of policies, including umbrella insurance, product liability insurance, and policies to cover business practice risks, destruction from weather events, potential suits, and more.
The cost of insurance will vary depending on the size and location of the dispensary, but it is important to factor adequate insurance coverage into the startup costs of any cannabis business. Without the right protection, dispensaries could be at risk of losing everything if something goes wrong. For dispensaries, having the right insurance policy in place is vital to protecting their business.
Product Liability Insurance for Hemp Business
As the legal landscape surrounding cannabis continues to evolve, more and more businesses are entering the hemp industry. With that comes the need for product liability insurance—a type of insurance policy that covers financial losses arising from injury or damage claims related to a seller’s products.
For hemp businesses, product liability insurance is essential in protecting against any potential lawsuits that may arise from selling a defective or dangerous product. It's important to make sure you are properly insured so that you can continue to operate your business without fear of financial ruin.
Keep two things in mind when shopping for product liability insurance:
- First, make sure you understand the coverage limits and exclusions of the policy.
- Second, be sure to ask questions about future changes in case your dispensary grows or you choose to offer different hemp or CBD products.
Despite having sufficient product liability coverage for the actual cannabis plants, processed products, edibles, or whatever else you sell, you will also need other types of insurance. Some are required by law and others are simply a good idea to make sure your company is well protected.
Other types of insurance your dispensary may need:
- Crop coverage: Although some NJ dispensaries may not own their own cannabis fields, businesses that sell hemp, CBD, marijuana, and related products do have a vested interest in the protection of the property and land that grows their crops. Of course, the yearly crop also deserves protection because it is constantly under threat from weather and other hazards that can greatly impact the financial stability of the brand itself. Crop insurance covers the value of the living plants, any harvested plant material on the property, and processed cannabis ready to be sent out for final product manufacture or direct sale.
- Property insurance: This either covers the agricultural land that grows the crops or the owned or leased property that the dispensary sits on. Every company needs property insurance to minimize risks associated with standard operations. Finding the right property insurance for businesses like these can be a confusing and daunting task. There are many different types of coverage available, and each type has its own specific inclusions and exclusions.
For instance, businesses in the cannabis industry have many types of property, including buildings, equipment, inventory, and land. Each type of property has its own risks and needs to be insured accordingly. Buildings are usually insured for their replacement value, which is the cost to rebuild the structure in the event of a total loss. Equipment is typically insured for its replacement value as well. Inventory is usually insured for its actual cash value, which is the amount it would cost to replace the items at current prices. Land is usually insured for its market value, which is the price it would sell for on the open market.
- Workers’ compensation policy: In the state of New Jersey, all companies must carry a workers’ compensation insurance policy. It does not matter if you are legally organized as a corporation, an LLC or partnership, or a sole proprietorship. If you have even one employee or minor partner associated with the brand, this is required by law. Of course, the same holds true for dispensaries. This is one type of policy that is very rarely connected to product liability, property insurance, or any other type. If you do not have this, you will get in trouble and have to pay considerable fines.
Workers’ compensation insurance is vital for companies and their employees. It provides financial protection in the event that an employee is injured or becomes ill as a result of their job. This type of insurance can help cover medical expenses, lost wages, and other associated costs. Workers’ compensation insurance can also help protect businesses from lawsuits arising from workplace accidents or injuries.
- Cyber liability insurance: Cyber liability insurance offers protection against losses caused by hackers and other cyber-related security threats. Cannabis dispensaries deal with quite a bit of personal and even medical information. People who use medical or recreational marijuana do not want their data leaked out. It could either reach the public eye or be used in a variety of scams commonly involved in cybersecurity breaches. Cyber insurance can help cover the costs of things like data breaches, cybercrime, and online defamation. Cyber liability insurance can be a valuable tool for businesses of all sizes that want to protect themselves from the growing threat of cyberattacks. It is your responsibility to protect your customers’ information with the best systems possible, but you also have to protect your business just in case something happens.
- Delivery and transportation insurance: The final dispensary-specific insurance coverage type you may need focuses on companies that provide delivery services. These are quite popular for convenience's sake and many customers enjoy the benefits of this option. Every person in New Jersey who operates any type of motor vehicle needs minimum liability insurance by law. However, this does not cover accidents, carjackings, or theft while performing work-related duties. In some ways, this is very similar to the commercial type of driver's insurance required by food delivery workers and rideshare operators. Once again, your New Jersey Trusted Choice independent agent is your best resource to determine what and how much insurance you need.
Cannabis Business Insurance Cost Factors
Dispensary insurance cost depends on a variety of factors just like any other policies. Once you factor in all the other necessary things like workers' compensation, commercial driving policies, and property or crop coverage, costs can increase quite a bit. Another factor is the specific location. For example, cannabis shops in high-crime areas may cost more to insure. The size of the building and how much product you keep in stock will also be included in determining premiums.
As the number of dispensaries and shops increases, we expect to see cannabis insurance availability and prices adjust. However, when you need coverage now, do not skimp on the essentials in an attempt to save money on your monthly bills. Deciding what works best for you and how much you can afford all comes down to specific dispensary information and the policies you choose.
It is always best to review your insurance needs with an expert. Your local Trusted Choice independent insurance agent has experience helping New Jersey individuals and businesses understand their options so they can choose the right coverage for their unique circumstances. By working with a Trusted Choice independent insurance agent, you get unmatched service and more insurance options because they search for policies from multiple insurance companies. Talk to your local New Jersey Trusted Choice independent agent today.
Why Work with a New Jersey Independent Insurance Agent?
In order to get the protection you need and deserve, you’ll want to work with a trusted expert. And who could be better for the job than a local agent who shares your ZIP Code? New Jersey independent insurance agents take the time to discuss exactly how much coverage is necessary for the unique needs of your business.
Independent agents act as your own personal insurance shoppers, offering you more options than one-policy companies. With just one call, they’ll start gathering multiple quotes for you to review so you can be sure you get the right coverage at the right price.
And, because they’re your dedicated agent, they’re not just there at the beginning, they're there to help walk you through the claims process and make sure you’re getting the benefits you're entitled to should an event occur.