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Marijuana Insurance: What Do Cannabiz Owners Need to Know?

By George Khoury, Esq. | Last updated on

As more and more states continue to legalize marijuana, both recreationally and medically, more and more businesses are getting in on the money grab surrounding the world's largest cash crop. For marijuana business owners looking for financial and legal peace of mind, purchasing insurance becomes an important consideration.

Along with the typical kinds of insurance that all businesses need to maintain, such as workers' comp. for employees and premises liability coverage for customers, cannabiz owners need to evaluate whether other insurance coverages are in their best interest. Additionally, if owners decide to purchase specialty insurance, they need to carefully read the terms of each policy to know what may be excluded.

What Type of Coverage Are You Really Getting?

When it comes to the marijuana industry, insurance companies have only recently started providing meaningful, specifically tailored, policies. Recently, an insurer made headlines when it sought to deny a product liability coverage claim after a marijuana foodstuff allegedly induced insanity and prompted a user to commit murder. While the maker of the pot edible has insurance coverage for their product, the insurer is stating this sort of incident is not covered under the policy.

What Coverage Do You Need?

When it comes to selecting policies, different types of marijuana businesses will want to maintain different types of coverage. The amount of liability marijuana businesses can face is immense, and the kind of risks cannabiz owners can try to protect against will vary depending on the kind of service they provide.

Pot edibles makers will want to be insured against accidental contaminations from allergens or other contaminants, just like any other food maker. Additionally, edibles makers and marijuana extract manufacturers may also want to make sure that the coverage extends to cover injuries caused by the concentration levels of their products.

Makers of marijuana smoking or vaping devices, particularly those that contain high powered batteries, will want product liability coverage for device malfunctions. A marijuana device maker may also seek to be covered for any and all injuries that occur after the use of its device. Additionally, device makers may want to consider product recall insurance.

Unfortunately, when it comes to the storefront pot shops, and marijuana dispensaries, these businesses may want to consider every type of insurance coverage available to them. Generally, under some product liability laws, every business that had a hand in making a product and putting it into a consumer's hands can be found jointly liable.

Cannabiz owners should consider working with a trusted insurance agent, as well as having an experienced business attorney review all potential insurance policies.

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