Insurance for Cannabis Transportation & Delivery

Cannabis is slowly becoming part of the daily habits of many US citizens, as 53% report having replaced alcohol with cannabis consumption. Not only that, but cannabis sales have had a 43% increase from 2020 to 2021, reaching $25 billion, and experts predict this number to rise to over $65 billion in 2030.

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Having this data in mind, it’s not surprising to see just how many entrepreneurs want to get their foot into the door of the cannabis industry. One way to enter is by working in cannabis transportation and delivery.

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This sub-industry is rapidly gaining traction, especially since the pandemic started when 44% of cannabis aficionados reported using a delivery service. But because cannabis is federally illegal, the life of a cannabis transportation and delivery company is complicated, to say the least.

The Lurking Dangers For the Cannabis Transportation & Delivery Industry

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Still being somewhat of a no-no in many states in the US, the cannabis industry faces more potential setbacks than any other thriving sector in the States. 

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There are numerous aspects for the cannabis transportation and delivery industry to take into consideration so as to be able to prospect.

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High Crime Risk

The pandemic lockdowns enabled a massive rise in cannabis consumption. In California alone, the cannabis industry made $4.4 billion last year. But the Sunshine State is also the home of Humboldt County and Murder Mountain - a hazardous area and a hotspot of cannabis-related crime, and Murder Mountain is a nightmare for legal cannabis delivery businesses. 

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Theft is a major threat to all cannabis delivery and transport companies, not just in Murder Mountain but all across the USA. The sad truth is that cannabis deliverers attract criminal activity, and the reason behind this is simple – they carry coveted cargo. 

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Unfortunately, in states where cannabis is illegal and not decriminalized, landing on an unsecured cannabis delivery truck is like hitting the jackpot. What’s more, because of federal regulations, cannabis businesses can’t use credit cards - this makes even the most straightforward transaction stressful and dangerous for the deliverer.  

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Many cannabis-related businesses decide to upgrade their security to fight off lurking dangers. Using an armored transit with an alert system and GPS tracking is becoming an industry standard.

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Certain companies, like the Cannavans, opt for more extreme measures, like digital lockboxes and 9 security camera systems. Others even decide to hire licensed and trained security teams, and some transporters are required to get security training themselves.

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A Logistical Nightmare 

The second bump in the road for cannabis deliverers is logistics. 

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Because cannabis is still federally illegal and each state has different regulations, the cannabis transportation and delivery companies can’t drive just everywhere. Things are becoming further complicated because each state has different definitions of transportation and delivery services and takes different stances on certifications.

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Generally speaking, if you have a transport license, you technically have the role of a courier between two different licensed businesses. On the other hand, a delivery license allows you to ship products directly to consumers.

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But whatever license you have, you won’t be able to drive nationwide; instead, you can only move through certain states that allow cannabis transportation. 

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The logistical difficulties are evident and are a large stumbling block for all cannabis businesses. 

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Distracted and Sleepy Drivers

Last, but not least, drivers today are more distracted and over-worked than ever.

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With phones getting more accessible, and entertaining, more drivers are reaching to them while driving. In 2020 alone, over 3,100 drivers were killed in car accidents due to crashed involving distracted driving.

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In addition, drivers are working longer hours and multiple jobs, so there mental capacity is posing a major issue to the industry. Sleepy, or drowsy driver accidents, account for about 100,000 cashed annually in the US alone.

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It's clear cannabis delivery and transportation operators face a huge risk with their drivers attention and focus.

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The Solutions

Logistics and safety, as two significant issues, will not be easy to solve until cannabis becomes federally legal. However, the cannabis community has always thrived, even in the most challenging eras. 

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To prevent these problems from influencing your success, you can minimize theft risks by upgrading security, doing driver vetting, and training your employees. For fixing logistical issues, you can hire fleet managers, use telematics services like Onfleet and Azuga, and focus your services in states that have decriminalized cannabis.

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Besides improving logistics and security, today's cannabis deliverers and transporters also decide to get insurance. Luckily, the law doesn’t prevent these hardworking people the right to protection against theft and injury.

What Is the Best Cannabis Transport & Delivery Insurance?

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Everything depends on the type of company you run and your business-specific needs. Most cannabis transportation and delivery businesses opt for one or more of these 7 insurance policies:

General Liability

General Liability insurance is a standard and all-encompassing policy that covers property damage and bodily injuries made by a third party. The General Liability policy also covers the medical and legal fees that might arise from these situations. The policy coverage is not limited to your business premises, so it will also cover the costs for damage that can happen during delivery.

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Product Liability & Recall

The Product Liability policy will protect your business if someone decides to sue you for the products you sell, manufacture, or distribute. Considering the variety of new vaping products on the market, the policy is an excellent idea for cannabis transport and delivery companies. You can additionally opt for the Product Recall policy to cover collecting and disposing of defective products and PR, as well as crisis management.

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Commercial Property

The Commercial Property insurance covers every property the business owns, rents, or leases; this includes damaged goods and transportation equipment. You can also choose which perils your insurance will cover. 

The common threats that have been reported as most common are:

• Natural disasters like floods, winds, and hailstorms;
• Accidents involving fire, smoke, etc.;
• Human-caused injuries like theft, vandalism, and riots.

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Cyber Liability & Data Breach

Considering the massive immersion of technology into every aspect of our daily lives, it’s safe to say that every serious company needs Cyber Liability & Data Breach insurance. This policy will cover the costs of financial loss because of data breaches and cybercrimes. 

Some policies include legal fees, data loss and recovery, loss of funds, crypto, cyber extortion, and forensic analysis.

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Workers Compensation

Every company that employs people needs the Workers' Compensation insurance, whether we’re talking about full-time or part-time employees, volunteers, or subcontractors. This policy will cover all work-related expenses, including medical fees and ongoing care due to work-related injuries and legal costs, lost wages, and death benefits. 

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Commercial Crime

The Commercial Crime policy provides coverage for any losses due to internal or external fraudulent activities, like embezzlement, theft, and even misrepresentation. Commercial crime is activated both when a crime is detected and after it occurs. Considering the crime risk for cannabis-related businesses, this is a highly recommended insurance policy for companies doing business in the cannabis transport and delivery industry.

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Commercial Auto Liability

This particular insurance policy covers all damage to the business vehicles caused by both first and third parties. Keep in mind that many personal auto insurance policies don’t cover damage during business trips. So, small-time cannabis deliverers who use their vehicles should consult with their insurers about whether to get Personal or Commercial Auto Liability insurance.

How Much Does Cannabis Transport & Delivery Insurance Cost?

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Most companies choose General Liability, Commercial Property, or Auto Liability insurance. The average cost for a standalone General Liability policy is between $700 and $2,000. A package policy including General Liability and Auto Liability range from $2,500 to $5,000 a year. Property insurance ranges based on values, so you should budget at least $1,000 a year.

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But, as it is with every insurance policy, the final cost will depend on multiple factors, including the location, materials, value, and safeguards as the most notable ones.

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To understand this better, let’s take commercial property insurance as an example. This policy will cost you more if your property is located in a high-crime area or with a high risk for natural disasters.

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However, the cost of every insurance policy can also be reduced. Since most insurance companies offer customizable insurance plans, you can mix and match different policies and coverages to cut costs. For example, you can include the Auto and Product Liability insurance into the General Liability insurance policy.

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We suggest you avoid any rash decisions when searching for the best insurance policy for your cannabis transport and delivery business. It’s crucial to consult with experienced insurance agents to find a policy combination that matches your criteria and needs.   

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Where Does the Cannabis Industry Stand Today?

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After many countries legalized and decriminalized cannabis, the stigma attached to this sought-after herb gradually started disappearing. However, changes within the industry are still going slow, and the reason for this is complex state and federal regulations.

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Each state has its own laws and regulations in the USA, so even though cannabis is technically legal in 37 states, only 18 of them allow recreational usage and selling. Federal law further complicates the problem, precisely the Controlled Substance Act of 1970. This act lists cannabis as a Schedule I drug, putting it in the same category as LSD and heroin, and making it federally illegal. Because of this, most banks are still not taking the cannabis sub-industries seriously, preventing them from accessing standard financial services.

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But the future of this controversial herb is far from gloomy. 

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On April 1st of 2022, the House of Representatives passed the MORE Act. Its primary goals are to remove cannabis from the Schedule I category, allow financial services to cannabis-related businesses, and subsidize individuals and companies that were affected by the war on drugs.

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With the pace the things are moving today in the realm of recreational and medicinal use of cannabis, it only becomes clear that changes are bound to happen, leading to cannabis-related insurance getting more in demand.

The process to get insurance is an easy and straightforward process. You get us the information we need to engage insurance providers and we'll supply the best possible quote(s). We're also real people that probably live in your city, and we value relationships, so meeting in person is always an option. At the end of the day, our job as brokers and advisors is to educate you on what everything means. It also helps us to understand your business and insurance needs, so we can get underwriter comfortable with quoting. We'll help you understand insurance and risk management practices, and be there for you as the business grows.

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Some traditional businesses can move through the process faster as a lot of underwriting is supported by artificial intelligence, but most policies today will be reviewed by an actual person. We have decades of experience working with the underwriters at each insurance company, and pitch your business to each of them. We work with and for you.

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The standard process to produce quotes for your business is as follows:

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1. Advisor Introduction: this can be a quick phone call, email, video conference or in person meeting. You'll decide if you enjoy the advisor and trust their advice. This is also where you'll be able to ask questions, provide information about your operation, and go over the process to get insured.
2. Data Collection & Underwriting: this is where you'll get into the fine details about underwriting questions and information that will be necessary to engage the insurance market. You'll be able to chose from filling out PDF's, going through our smart-form technology, or provide it all over the phone, email, or in person.
3. Quote Proposal & Review: once your advisor has the information needed for underwriting, they will work with the insurance market to produce quotes. This can take a day or up to a week, depending on the time and operation.
4. Finalize Coverage: here you'll decide the coverage to move forward with. Final steps include signed documents, payment, and selecting a specific start date.

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ADIVSOR TIP: Be prepared to spend 5-10 minutes with your advisor to break the ice and get the ball rolling. Once aligned, your advisor will create clear next steps and create a timeline for quotes. If your business is new, and has unique risks, then you should expect a little back and forth.

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Get in touch with your advisor, or send over the details digitally today.