The cannabis industry is constantly evolving, especially in New York. Back in July, the Cannabis Control Board (CCB) approved the initial conditional adult-use licensing rules and accepted a mockup of the application form — a significant milestone for the industry.
On August 25, the New York marijuana regulators office began accepting applications for a month’s trial of the state’s first adult-use retailer licenses, reserved for residents impacted by the war on drugs. As the adult-use market continues to expand, more entrepreneurs will be able to apply for a dispensary license.
Overview of Dispensary License Insurance Requirements
Considering that the industry’s future developments are progressing every day but are still uncertain, it is important for dispensaries to have the right business insurance to help protect their cannabis venture. Some of the lawsuits and claims that can arise in this industry relate to matters such as pesticide residues, unsafe handling, warning labels, and side effects. Moreover, medical marijuana dispensaries and other cannabis businesses are vulnerable to problems such as theft and fires.
According to MFE Insurance, all New York cannabis businesses need property insurance to cover damage to their property. This type of policy can help with a growing operation or dispensary with the costs associated with repairing or replacing covered damaged property, such as your business’s building, contents, inventory, and computer systems. It can also cover issues such as water backups.
The Importance of Product Liability
Product liability is another essential type of insurance for all cannabis businesses in New York so they can protect their company in cases where the use of their products results in injury or damage to others and they decide to sue. It is particularly important in the cannabis industry, where recent legalization means that many customers will be new to the products and may not be familiar with proper usage.
“In the case of a product liability claim, everyone in the entire chain of command for that practice can be named in some sort of lawsuit, so it is very important for dispensaries to have their own product liability,” Isaac Bock, Managing Director of AlphaRoot, said. “Especially if you are selling multiple different brands and do not have a say on how they do things on their end, product liability can help if you are the end seller to the customer.”
How to Protect Your Dispensary Against Theft
Since business insurance does not cover theft, and retailers can lose thousands each year due to theft, cannabis dispensaries need to ensure that their products are properly looked after. Roughly 90 percent of financial and product loss in the marijuana industry can be chalked up to employee theft, according to MJBizDaily. The other 10 percent of product loss results from either external theft, such as robberies, or simply poor tracking by companies.
“One of the biggest issues within the cannabis industry right now is that dispensaries are getting broken into,” Bock said. “To protect against this, the first thing is to have a buzz in, and buzz out system to prevent quick theft, as well as thick glass, bars against the windows, and all the protection that is similar to that of jewelry or high asset retailers. Following those guidelines is a good way to start.”
Some insurance companies will require cannabis dispensaries to install 24/7 video monitoring systems, an alarm system, to remove all inventory from the shop floor, and place any cash into a vault at night, according to Bock. If someone walks by your storefront at night and sees products out, they can easily just smash a window, grab what they want, and run.
The more proactive cannabis dispensaries are about protecting their store from theft and other damages, the more successful they can be in a competitive industry.