Considering getting into the cannabis business in 2020? Trying to keep up with insurance and financial information while growing your current business? Here’s what you need to know for the year ahead.
More Insurance Options for More Cannabis Producers
In 2020, with plenty of changes on the horizon and more coming, insurance options for cannabis businesses are increasing. Industrial hemp may be moved into the federal crop insurance program, creating more opportunities for businesses in that sector. More insurers are moving into the cannabis industry which will provide more options for companies — more available policies, more carriers to choose from, and higher liability limits. This is great for companies as there will be more competition for business and more coverage options to choose from.
Due to an increase in lawsuits impacting the cannabis industry, businesses should expect rates for liability coverage to increase, specifically product liability. The recent contamination claims with regard to vaporizers and batteries has increased the concern about future claims. At the same time, bad actors continue to build their business by falsifying labels and claims of their THC products which leads to more lawsuits and insurance claims. The response from insurance providers is to increase premiums.
Liability Coverage Isn’t a Luxury
Thanks in large part to those bad actors and resulting lawsuits, liability coverage isn’t exactly a luxury for a cannabis business who wants to last in today’s market. Product liability coverage is more important than ever. And as companies begin to navigate the reality of today’s cannabis market with some companies thriving and others failing, Directors and Officers liability coverage will be more important than some businesses realize. For companies facing a fall-out, the lack of D&O coverage will cause personal financial pain for directors and officers. Even for companies in good standing today, D&O insurance is imperative to protect your board against the future.
The Safe Banking Act
The Safe Banking Act is something closely watched by everyone in the cannabis industry. It overwhelmingly passed the House in 2019 and now needs to be approved by the Senate and signed into law by the President to go into effect. If it does, the financial sector will open up to the cannabis industry in a big way — allowing for more banking, investments, and insurance options through the financial sector.
If you’re building a cannabis business, you need insurance made for your industry. Contact Charlotte Insurance today to discuss your options!