Insurance for Cannabis Warehousing & Distribution
If your business stores, warehouses, or transports cannabis, hemp, or CBD, then you should consider insurance. Our insurance advisors work with you to collect the details about your cannabis operation and broker with multiple insurance companies.
Shipping cannabis, hemp, and CBD is a vital process needed to reach consumers. Before a consumer can get cannabis products, the distribution process must occur. Manufacturers use distribution companies to get CBD to wholesalers and retailers across different regions. Online stores also use distribution companies to fulfill the shipments of customers who buy CBD online.
There are big cannabis, hemp, and CBD companies that cultivate, process, manufacture, and distribute CBD products. While some companies handle storage and distribution alone. Whatever the case, any company shipping these products must have some basic infrastructures in place and abide by certain regulations. Some of these are examined below.
When products leave the facility of a manufacturer, a distributor needs a warehouse to temporarily store the products before shipping. Numerous circumstances may require temporary storage of cannabis and hemp before shipping to wholesalers or retailers. A warehouse with the appropriate equipment and design to store whatever form of products is essential.
Automobiles in the form of trucks or vans must be purchased to transport cannabis, hemp, and CBD from manufacturers to warehouses and finally to stores or end-users.
Any logistics business needs employees to run it efficiently. A distribution company will need workers at the warehouse for a series of tasks and also to handle deliveries.
Some companies that cultivate and manufacture CBD choose to outsource the distribution to logistics companies. Some combine manufacturing and distribution, and others choose to operate solely as distribution companies.
Some of the trusted and valid logistics companies that ship CBD are USPS, UPS, and DHL. It's good to note that these companies only work with CBD companies that meet certain requirements. And this brings about the issue of regulation. Before a company can start to sell or distribute hemp derivatives like CBD, it must obtain some licenses.
License to Grow
A supplier can only ship or distribute cannabis, hemp, and CBD that comes from a licensed grower. For a company that handles every process from seed to sale, a license to grow must be obtained. A licensed grower has been approved and crop sare monitored by governmental agencies.
A third-party laboratory must test CBD products before sales. The test assesses the THC level and other chemical constituents. The certificate of this test must be obtained to prove the authenticity of the CBD.
THC Level and Plant Origin
The acceptable level of THC in any CBD is 0.3% for it to remain non-psychoactive. The origin of plants used to manufacture CBD is also important. CBD can come only from hemp plants and not marijuana.
The hazy aspect of the cannabis and hemp industry is usually the legal side. Some years back several suppliers had CBD products seized due to different laws across state lines. A distribution company must obtain necessary permits in the states it intends to ship any cannabis, hemp, or CBD to avoid legal troubles.
Common losses are usually related to employee claims, property damage, and automobile problems. A company handling cannabis/hemp warehouse and distribution needs a warehouse, employees, vehicles, and equipment. They also need the appropriate protective equipment and practices to ensure products are not tampered with.
Employees can file lawsuits due to bodily injury, harassment, discrimination, and work benefits. Losses can also result due to automobile damage, equipment damage, and warehouse damage. Additionally, the ever-changing regulations concerning cannabis, hemp, and CBD and consumer claims may cause losses.
Running a cannabis, hemp or CBD company is just like any other business. Multiple coverages are necessary to fully protect a businesses people, property, and customers. Some important coverage to acquire are:
General liability gives a business coverage for a wide range of incidents that includes property damage, bodily injury, and claims from consumers. It can also include coverage like Product Liability and Recall to protect any product-related claims.
If you own or lease a building and are storing any valuable property, a commercial property policy will protect it from fires, weather, theft, vandalism, and more.
Workers Compensation and Employers Liability coverage protects a business from injury-related claim and pays for medical expenses of injured employees & contractors, and pays death compensation.
Commercial auto insurance coverage gives an excellent cover to all vehicles owned by a business. This includes company owned vehicles, employees autos, and vehicles the business may rent. It covers repair, replacement costs, and liability according to each situation.
Employment Practices Liability
Under the employee practice liability, a business gets protection against all types of claims by employees. It pays for lawsuit expenses, settlements, and penalties related to discrimination, termination, harassments, and other employment situations.
Fiduciary Liability Insurance
Fiduciary liability insurance is applicable if a company offers employee benefits.
ADVISOR TIP: A cannabis or hemp company should discuss with a Fullsteam Advisor and their attorney to assess other liabilities and purchase insurance policies that will help protect the business adequately.
The premium cost is best determined with the insight of a professional insurance advisor. An insurance agent familiar with the cannabis industry can assess cannabis, hemp, or CBD distributing company's operations and select essential coverages. Majorly, some factors are responsible for the variation in coverage cost. Coverage cost is not uniform due to:
The scale of production and employee size influences the cost of coverage. A larger production scale increases the chances of damages or faults, and a big employee size means higher claims.
Since insurance covers repair costs and sometimes replacement, the value of properties in a facility determines the premium costs. The higher the property value, the higher the cost of the coverage.
Risk management in a facility reduces the chances of injury and damage. An insurer will assess the risk management system in place before the price of coverage is decided. A facility with safeguards and a good maintenance system tends to pay less than one without.
The bigger the annual sales or projected annual sales, the costlier the coverage. To pay less, a company is often encouraged to buy all types of essential coverage from the same insurance company.
An all-encompassing coverage for a CBD distributing company may amount to $5,000 or more.
ADVISOR TIP: To get an accurate price, call, text, or send us an email to discuss with Fullsteam Cannabis Advisor. Our trained and experienced agents understand the processes of the cannabis & hemp industry. We'll give you just the insurance advice you need!
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.
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.
The standard process to produce quotes for your business is as follows:
- 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.
- 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.
- 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.
- Finalize Coverage: here you'll decide the coverage to move forward with. Final steps include signed documents, payment, and selecting a specific start date.
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.
We could have our algorithm give you a quote in 10 minutes. But your business deserves better than that. You deserve a dedicated insurance advisor and service team who knows how to manage complex risk.
Your personal insurance advisor will negotiate the best coverage, at the best rate, from the best insurance carriers. Because anything less wouldn’t be acceptable.
Think of us like your personal risk management concierge. The godparents to your business. Call, email, text, DM... we’re here whenever you need us.
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