Insurance for Cannabis Cultivators & Growers

Cultivation is just a fancy way of saying to grow or farm a living product, deriving from the same process that most traditional farms undertake to produce food. There are 5 key steps in the supply chain before the product gets to the customers - cultivation, manufacturing, distribution, transportation, and retail.

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The first step, cultivation, often requires a lot of space, property, and power. It also requires a substantial number of workers and management. Whether the product is grown outdoors, indoors, or in a greenhouse, the process from seed to harvest is similar. Below are the 6 common cultivations stages:

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1. Germination: After the seed is in a warm, moist, and dark place, it begins to sprout and roots develop. This process takes 1 to 8 days.
2. Seeding: When the embryonic leaves begin to show and push away the remaining seed, the seeding phase starts. This process takes 1 to 4 weeks.
3. Vegetative: The plant will expand its roots downwards looking for more water and food so it can build a strong root system. This lasts 1 to 2 months.
4. Pre-flowering: Growth will continue, usually doubling in size as the plant stretches and begins to form flowers. This takes 1 to 2 weeks.
5. Flowering: The flowers will continue to grow and produce large clusters called panicles. This process takes 6 to 25 weeks depending on type of plant.
6. Harvested: When the plant is ready for drying, they are cut from the group and prepared for the final processing phases before being distributed.

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If your business is part of the growing, farming, or cultivation process, then keep reading as we go over risk management and insurance recommendations.

Depending on the size, grow technique, and location of your operation, the coverage doesn't really changes (the limits just go up or down). A cannabis grow operation has 3 simple parts, which always need to be top of mind:

• Your People: These are your employees, clients, board members, partners. and other individuals that work with your business.
• Your Property: This everything you own, rent, or lease - buildings, tools, plants, vehicles, computers. If it's tangible, it's insurable.
• Your Customers: These are the people buying the product - a recreational user, and everyone in the supply chain.

Each of the categories above have their own set of exposures too. Lawsuits from other businesses, employee injuries, and building fires are some of the most common examples. If you'd like to protect your business from these unforeseeable situations, consider purchasing insurance.

No matter the size of your cannabis, hemp, or CBD business, all of the following policies are recommended:

• General Liability: If another business sues you for bodily injury or property damage, a GL policy will defend you and pay legal expenses (ie, an inspector slips and falls on your wet floor)
• Product Liability and Recall: If a customer sues you for bodily injury, a PL policy will defend you and pay legal expenses (ie, they consume your bud and it makes hem sick)
• Commercial Property: If any building, improvement, tool, equipment, crop, or electronic is damaged, the policy will cover costs to fix and/or replace the property (ie, your warehouse burns down)
• Workers Compensation: If an employee or sub-contractor is injured while working, a WC policy will pay for medical bills (ie, a worker drops a heavy box on their foot) [learn more]

Larger operations will have higher costs and bigger budgets, so other insurance may be applicable. Some examples of specialized insurance below:

• Commercial Automobile: If you own, rent, or lease any vehicles used for the business, an auto policy will cover their liability and physical damage.
• Directors & Officers: If you have a board, directors, or officer, and a decision by an individual affects the business, then a D&O policy will respond and protect their personal assets.
• Employment Practices Liability: If your employee or other worker sues you for things like sexual harassments, discrimination, wrongful termination, or other employment claims, an EPLI policy will defend you.
• Crop Insurance: If your cannabis, hemp, or cbd is damaged, destroyed, or stolen, a crop insurance policy will replace the product.
• Cargo Coverage: If you transport or deliver any money, products, or plants, a cargo policy will cover theft and damage while it's in transit.
• Cyber Liability & Data Breach: If your business collects any personal, financial, or other sensitive information from clients, customers, and/or workers, and the information is stolen, a cyber policy will protect you.

Depending on your business, there could be numerous additional policies (crime, surety bonds, equipment breakdown), so it's important you speak with a cannabis advisor. Our team will analyze your business, advise risk management best practices, and negotiate with all insurance companies, ensuring the most comprehensive and competitive quotes.

The price of insurance varies and there's certainly not a premium estimate before understanding and analyzing the cultivation operation. Larger operations typically have more customers, clients, property, and people, which all add to the cost of insurance.

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Factors that affect the price are the following:

• Business Activities: Are you only cultivating? Any manufacturing, extraction, processing, or other similar activities? Any retail or delivery to customer?
• Indoor vs Outdoor vs Greenhouse: an indoor operation have much different exposures than an outdoor
• Total Annual Sales: higher the sales, higher the exposure, higher the premium.
• Total Replacement Value of all property: combine the value of all property - buildings, equipment, crop - higher the value, the more premium.
• Number of Employees: as your employee count increases the chances for injury and other employment claims increase.
• Safeguards: risk management produces will reduce the premium, and open doors to more insurance companies

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Any new cannabis operation should expect to pay at least $5,000 for an insurance package the included General Liability, Product Liability, and Property Coverage. Workers Compensation rates are set by the Department of Insurance and range from 5% to 15% of your total payroll for growtechs, and less than 1% to 2% for officer workers. D&O and EPLI insurance are going to depend on the financials, number of workers, and owners experience.

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Call, text, or email us today, or schedule a meeting, and speak wit a Fullsteam Cannabis Advisor. You deserve a specialized insurance agent, modern processes, and an insurance carrier that has your back.