Medical marijuana dispensaries are opening up throughout the country as more and more states legalize the use of marijuana for medical purposes. Medical marijuana provides effective relief for the pain and suffering of many people who have serious illnesses, and new research is constantly emerging supporting these claims. Many dispensary owners find connecting people with medicine that eases their symptoms to be a very rewarding endeavor, but dispensaries can be expensive businesses to run and face a broad range of risks.
Some of the claims and lawsuits that medical marijuana businesses might face include pesticide residues in products, unsafe handling practices in manufacturing, and inadequate warning labels that cause illness or harm to customers. There are a lot of unique risks that marijuana businesses face, and these come on top of the general risks that all types of retail businesses must account for.
Factors That Impact The Cost Of Insurance
Insurance can help protect your medical marijuana dispensary against a broad range of risks and is well worth the investment. The average price for a standard general liability insurance policy for a small dispensary ranges from $97 to $159 per month. However, the exact cost of this insurance can vary significantly. Here is a look at the primary factors that affect the cost of medical marijuana dispensary insurance.
1. The Type Of Coverage
One of the biggest factors in determining your insurance cost is the nature of the policies that your dispensary needs. Some of this may depend on the products and services your dispensary offers and whether or not you offer delivery services. Outlined below are some of the policies you might choose.
General Liability
This is considered a must-have for businesses to protect from damages and injuries. For dispensaries, it covers third-party lawsuits that take place during a claim involving anyone other than the dispensary’s workers and employees.
Workers’ Compensation
All businesses must carry workers’ compensation policies for all of their workers, and marijuana dispensaries are no exception. This covers medical costs stemming from injuries or illnesses on the job, along with replacement income, retraining costs, benefits to survivors of workers killed at the business, and permanent injury compensation.
Product Liability
Product liability is another essential policy for dispensaries because you are selling different products that each carry their own set of risks. This policy protects your dispensary against claims of injury or damage stemming from the use of your product that may be filed by an individual or group of customers who have experienced similar effects. It is especially useful when you consider the fact that medical marijuana is a relatively new field and many consumers may be new to the products you offer.
Losing claims could mean the end of your business or the loss of your license to sell medical marijuana, so it is important to have a high degree of protection in place. The price of this component is tied to the value and nature of the products you sell.
Crop And Inventory/Finished Stock Insurance
Whether your dispensary grows its own crops or simply keeps finished products in inventory, cannabis crop insurance can protect you from asset and financial loss. This type of policy covers the live plants during growth as well as after trimming, processing and preparation for sale.
2. Coverage Limits
The coverage limits that your dispensary chooses also play a role in determining your insurance cost, with greater limits generally carrying higher premiums. It is also possible to buy excess liability insurance in the form of an umbrella policy that provides you with protection for any claims that exceed the limits set out in your primary liability policy and does not kick in until you have met the limits of the primary policy. Growing companies that run the risk of big losses should consider this extra layer of protection.
3. Location
The location of your dispensary influences the cost of insurance, with dispensaries in urban settings often paying more than those in other areas. The state where your dispensary is located and its marijuana regulations will also contribute to the price you pay.
4. Size Of Dispensary
A larger dispensary that offers a broader range of products can expect to pay higher premiums than smaller, simpler dispensaries. The more products your dispensary sells, the more opportunities there are for products to cause reactions or harm to those who use them, which means that policies like product liability insurance will cost more.
Reach Out To The Medical Marijuana Insurance Professionals
Get in touch with our medical marijuana insurance professionals at MFE Insurance Brokerage to learn more about the policies we offer and how they can protect your business. We can assess your dispensary and recommend the right set of policies to ensure maximum coverage while working within your budget to give you peace of mind. Our cannabis insurance team has policies designed to meet the needs of dispensaries and other marijuana-related businesses of all sizes.