Learn how marijuana and cannabis products manufacturers insurance helps medicinal & recreational cannabis industry manufacturing businesses protect themselves against the many complex risks they face every day. Whether your business is large or small, or you make one or many products – you need the right commercial insurance program to protect you.
Marijuana And Cannabis Products Manufacturers Insurance
DISCLAIMER Marijuana is still classified as a Schedule I controlled substance by the U.S. Drug Enforcement Agency, and as such it remains a federal crime to grow, sell, and/or use marijuana. Any content contained herein is not intended to provide legal advice or to assist with violation of any state or federal law.
Marijuana And Cannabis Products Manufacturers Insurance. Marijuana products manufacturers start with raw cannabis leaves. The stem is removed from the leaf and the leaf is cleaned and cured. Curing involves drying the leaves and sometimes adding flavoring agents. Additional processing converts the leaf into a liquid, loose-leaf, oil, powder, pill, rolled or vapor form that can be sold.
Some manufacturers develop creams, lotions, and other topically applied products that are infused with marijuana. Others may develop edibles that are made with marijuana-infused butter. As marijuana becomes more normalized, additional products will be developed.
Some research indicates that marijuana is useful in pain relief for conditions such as chemotherapy-induced nausea, glaucoma, multiple sclerosis, and neuropathy, and as an appetite stimulant for such disorders as AIDS wasting syndrome. However, the FDA has not approved it for any type of medicinal or recreational use as no studies have been done in clinical trial settings. Conducting clinical research involves the FDA along with the DEA (Drug Enforcement Administration) and the NIDA (National Institute on Drug Abuse). Concerns have been expressed as to the lack of consistency in drug purity and potency, impact on fetuses by pregnant women, and long-term usage implications such as drug dependency.
Currently, over half of the states have approved the use of medicinal marijuana under specifically defined circumstances, while nine states have approved its recreational use in small quantities. Manufacturing and distribution guidelines vary by state, as well as the form in which the product may be sold. However, the federal government continues to criminalize the growth, cultivation, and use of marijuana regardless of the circumstances. It is unclear how the differences in state and federal law will ultimately be resolved.
Marijuana-based products – such as CBD oil, waxes, gummies, vaporizers, gums, and candies – are becoming more and more popular in the American culture. As scientific findings have pinpointed the many benefits of these products, individuals who are looking for holistic remedies for a variety of ailments are seeking out these products.
Despite the popularity of cannabis products, the majority of traditional insurance policies will not cover these items because they haven’t been approved by the Food and Drug Administration (FDA). As a result, those who work in the marijuana products manufacturing industry face significant risks in the event that peril strikes and their products are damaged during the process of manufacturing these items.
Add to that the fact that that those in the marijuana manufacturing industry face the similar liabilities as any other industry, and it’s easy to see why having the right marijuana and cannabis products manufacturer insurance protection in place is absolutely essential.
Why Insurance Is So Important For Marijuana Products Manufacturing
Business owners are faced with a variety of liabilities. Third parties could be injured on your premises, products may become damaged during the process of manufacturing, clients can file negligence claims against your business, and your employees could become injured while on the job. These are just some of the examples of the circumstances that may arise.
In any of the above-mentioned situations, you could be held legally responsible, and as such, would be required to cover the cost of damages and legal fees. These costs can be exorbitant and crippling, resulting in serious financial hardship. There’s a chance that you could end up going bankrupt, and you could potentially lose your entire business.
Given the fact that these types of perils can be so damaging, it’s important to have the right type of marijuana and cannabis products manufacturer insurance coverage. With proper insurance, you and your organization will be protected from financial devastation.
Types Of Insurance For Marijuana And Cannabis Products Manufacturers
Cannabis product manufacturers should have a number of insurance policies in place in order to properly safeguard their business from financial losses. Some of the coverage options that you are strongly recommended include the following:
- Marijuana Products Liability: This type of insurance policy is specifically designed to cover the marijuana-based products that you manufacture. As mentioned, many traditional product insurance policies will not cover cannabis products, as they are not approved by the FDA. In the event that the items you produce are damaged during production, you could be facing significant financial losses. Having marijuana product insurance will safeguard you should your products become damaged during manufacturing.
- Commercial General Liability: If a third-party is injured on your commercial property, or claims that you or an employee damaged their property, commercial liability insurance will protect you. This form of insurance will assist with the cost of any damages that you are responsible for. It can also help to cover legal expenses, including litigation, court fees, and settlements.
- Workers Compensation: Your employees can be exposed to a number of risks on a daily basis. A slip and fall or malfunctioning equipment can lead to serious expenses for your business.Whether you employ a handful of people or you have a staff made up of hundreds of individuals, workers’ comp is a must. In the event that an employee does suffer an on-the-job injury or illness, your insurance carrier will help to cover the cost of the employee’s medical bills and lost wages, as well as any litigation fees that may arise if the individual decides to take legal action.
- Business Auto: If you and your staff use vehicles to transport the goods that you manufacture, it’s also important to invest in commercial auto insurance. If an accident occurs while an employee is operating a vehicle for business-related purposes, this form of insurance will help to cover the cost of damages and injuries.
These are just a few of the insurance coverage policies that cannabis & marijuana product manufacturers should invest in.
Marijuana And Cannabis Products Products Manufacturing’s Perils And Risks
Property exposures include offices, drying facilities, processing areas, and warehouses for raw marijuana and finished goods. Ignition sources include electrical wiring, heating and air conditioning systems, dryers, and production machinery.
The large draft spaces in storage warehouses can contribute to the spread of a fire. Chemical additives may be highly flammable and add to the fire load. Accumulations of dust can result in explosions. This hazard increases in the absence of well-maintained dust collection systems. Raw goods and finished products, which are highly combustible and easily contaminated by smoke, temperature changes, and humidity, are also targeted by thieves due to the high resale value in the black market.
Vandalism can result from trespassers and protestors. Appropriate security controls must be taken including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Equipment breakdown exposures include breakdown losses to production equipment, dust collection and ventilation systems, electrical control panels, and other apparatus. Breakdown and loss of use to the conveyor and other production machinery could result in a significant loss, both direct and under time element.
Crime exposures are chiefly from employee dishonesty and theft of money and securities due to the high resale value of marijuana products on the black market. Employees may act alone or in collusion with outsiders in stealing money, raw materials, or finished stock. Background checks should be conducted on all employees. There must be a separation of duties between persons handling deposits and disbursements and handling bank statements.
Inland marine exposures include accounts receivable if the manufacturer offers credit, computers (which may include computer-run production equipment), goods in transit, and valuable papers and records for customers’ and suppliers’ information as well as quality control testing results. Backup copies of all records should be made and stored off premises. Goods in transit may be damaged by fire, theft, collision and overturn, or contamination.
Premises liability exposure is normally low due to limited access by visitors. If tours are offered, visitors may be injured by slips, trips, or falls, or may be exposed to toxic or caustic chemicals. Floor coverings should be in good condition, no frayed or worn spots on carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked.
Enough exits must be provided and be well marked, with backup lighting systems in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. If the business is open after dark, there should be adequate lighting and appropriate security for the area. Toxins released in a fire or fumes, spills or leaks from chemical tanks may cause serious injury or property damage to neighboring properties.
Products liability exposure is currently unknown as no long-term scientific studies have yet been completed evaluating the effects of marijuana on human health. There could be serious adverse impacts as users tend to hold the smoke in their lungs longer than tobacco smokers. However, tobacco products receive a federal exemption from most types of product liability claims as tobacco has been a known carcinogen since the 1960’s.
Such an exemption is not available for marijuana manufacturers. A concern with edibles is that they are visually indistinguishable from non-marijuana infused products and packaging is attractive to children.
Environmental impairment exposures are moderate. Sudden or cumulative discharges of chemicals used as additives (which may be toxic or combustible or both) may contaminate air, surface or ground water, or soil. Disposal procedures must adhere to all EPA and other regulatory standards.
Commercial auto exposure may be moderate if the manufacturer transports raw materials or finished products. Manufacturers generally have private passenger fleets used by sales representatives. There should be written procedures regarding the private use of these vehicles by others. Drivers should have an appropriate license and an acceptable MVR. All vehicles must be well maintained with documentation kept in a central location. If the product is in the vehicle with the driver, adequate ventilation is important to prevent driving impairment.
Workers compensation exposure may be high. Injuries from production machinery are common, as are burns, cuts, slips, trips, falls, hearing loss from machinery noise, and back injuries from lifting. Employees should be provided with safety equipment, trained on proper handling techniques and have conveying devises available to assist with heavy lifting.
Flammable liquids and chemicals can cause skin and eye irritation. Cumulative exposure to marijuana dust may create a potential for lung and respiratory diseases and injuries. Drivers of forklifts and vehicles may be injured in accidents. Appropriate ventilation of the facility is crucial because of the potential impairment of employees due to exposure to the product that may contribute to accidents and possible long-term health issues.
Marijuana And Cannabis Products Manufacturers Insurance – The Bottom Line
We hope this article on marijuana and cannabis products manufacturers insurance has been informative. To find out more about what type of insurance you should have and how much coverage you should carry, speak to a commercial insurance broker that specializes in business-related insurance and the marijuana products industry.