The cannabis industry is growing and changing at an unprecedented pace, creating huge profit potential and highlighting the various risks for those involved in this field.
Understanding current and emerging trends across industries is essential for businesses looking to maximize profitability while effectively managing risk. Taking a proactive risk management approach is critical to mitigating potential losses and protecting your employees, property, and profitability. Here are three steps to do that.
Step 1: Attract and retain the right talent
Attracting and retaining top talent is more difficult than ever for any industry. Employees now wield significant power and are often viewed as new customers. They are craving more flexibility in their working arrangements and are reevaluating their benefit expectations in light of the COVID-19 pandemic.
To address these challenges, cannabis businesses should consider:
- Compare your current benefits with benefits in your competitive industry
- Present unique and attractive options to attract and retain talent
- Maintain effective communication to ensure employees are aware of the benefits on offer
- Leverage industry expertise to ensure the long-term sustainability of your benefits program
The multi-year strategy will include policies and procedures that consider cost management, HR advocacy, and employee health and performance, all of which will be addressed through the use of HR benefits technology. Employee communication is key to gaining buy-in from teammates.
Step 2: Protect your assets
To protect your business, implement a multi-dimensional risk management approach by establishing physical, administrative, and compliance controls.
physical control This includes investing in security technology (including cyber), locks, gates, lighting, cameras, access controls, guards, and patrols to protect your buildings and inventory.
management control We focus on developing security policies, procedures, staff awareness training, de-escalation techniques, threat reporting, and conflict management programs to help protect your team.
Compliance management involve Developing systems to stay organized, current, and compliant with state-specific regulations and licenses, including environmental considerations for cultivation and contamination concerns.
Step 3: Consider insurance coverage
Recreational marijuana is now legal and available in the United States in 24 states; 38 states and the District of Columbia have approved its use for medical purposes. Although legal access to cannabis is on the rise across the country, many carriers still do not provide the coverage the cannabis industry needs. federal law It still maintains that the use, sale, and distribution of the substance is illegal.
Another problem is the lack of experienced professionals to take on the risks associated with the cannabis industry. Although many companies do not yet underwrite this area due to legal and reputational risks, the supply of insurance available to the cannabis sector includes: Steady increase between 80% and 100% per year.
For those purchasing cannabis insurance, there are a number of losses and exclusions that must be considered before purchasing coverage. common losses This includes recalls for fire and employee theft, operational water damage and pollution, and product contamination. General exclusions Includes exclusions for criminal activity and health hazards. More specifically, this includes exemptions for on-premises consumption, e-cigarettes, and cannabis in general.
To mitigate these risks, it's important to partner with an insurance company that understands the complexities of the cannabis industry and can help you avoid exclusions. A broker with industry-specific knowledge is essential to ensuring you have the right coverage with the right limits.
All cannabis businesses should consider obtaining coverage to reduce risk through the following policies:
- commercial general liability
- Management responsibility
- Product liability and product recalls
- property and crop insurance
- Equipment breakdown insurance
- Corporate car insurance
- Care, storage and management compensation for distributors
- Worker's compensation
For the future
The cannabis industry is rapidly evolving, and with it comes both opportunities and risks. To achieve profitability and minimize potential risks, adopt a proactive risk management approach that addresses employee needs and protects assets.
and increase profitability. Cannabis executives also need to have robust business continuity plans in place to ensure business operations can withstand unforeseen disruptions, such as product safety lawsuits or mergers and acquisitions.
To succeed in this dynamic field, it is essential to understand common risks and insurance exclusions and stay informed of emerging trends and regulatory changes. A combination of strategic risk management and proper insurance can help cannabis businesses thrive in a growing and competitive market.
