Every business should have crime insurance to protect it from losses due to criminal activity. Dispensaries can be cash-intensive operations, so this adds an additional risk to operating this type of business. Robberies of dispensaries have risen over the years in many cities. Denver, for example, has hit a 3-year high in dispensary robberies last year.
Dispensaries have more than just robberies to be concerned about. They also have different risks which make a proper insurance policy look very different from those for other businesses. With industry predictions showing that this industry will continue to grow, the associated risks continue to grow as well.
Crime insurance protects a business from many types of criminal activity. Businesses with crime insurance are reimbursed for the loss of money, security or other types of property that are directly affected by the criminal act. Let’s look at what coverage that crime insurance can include and how it’s relevant to dispensaries.
Protection from Employee Theft
Dispensaries have to protect themselves from employee theft just as other industries do. While the majority of employees may be trustworthy, there are some that are dishonest and go well beyond taking a few office supplies here and there. The National Retail Federation found that 1.41% of retail sales was lost to employee theft. An even more alarming statistic shows that 75% of employees have reportedly stolen from an employer on at least one occasion.
A cash business simply has more risk of potential theft from employees because it’s not just the business owner handling the cash every day. Installing security measures, running extensive background checks before hiring an employee and performing regular inventory checks can mitigate the risk of employee theft.
Nothing is foolproof, however. Despite the best precautions, there are still loopholes employees with bad intentions can get through to steal money from your business. Firing an employee who steals from the business prevents some risk of further theft, but crime insurance can help recoup financial losses.
High Rates of Robbery
Ten percent of business burglaries from 2012 to 2016 in Denver were those committed at cannabis businesses. This industry accounts for less than 1% of all businesses, which indicates the rate of robbery for dispensaries is higher. A criminal who is intent on robbing a business probably assumes they will have a bigger payoff from a dispensary than from other types of targets.
Crime insurance has coverage options that provide protection for loss of property as well as the loss of money and securities that are stolen from within the premises. Thieves may seek to steal high-end products in addition to cash held on premises.
Defense Against Forgery
A dispensary business could accept counterfeit money or a forged check as payment for goods without realizing it until later. Altered bank drafts and other forged financial instruments can result in your business losing hard-earned money to criminals. By the time the fraud has been identified, it is already too late. With a forgery or alteration policy written into a crime insurance coverage, dispensaries can protect themselves from these risks.
Insulating the Business from Fraud Reach
The physical location of a dispensary is not the only target of criminal acts. Fraud is a huge concern in today’s world and the perpetrator of these crimes aren’t limited to being an unknown fraudster that is actively trying to find ways to expose businesses. Employees with bad intentions that have access to internal systems are potential perpetrators of these types of crime.
For example, there are certain employees that could be designated responsible for handling payment activity for vendors that interface with a business. It is possible that an employee could initiate an unauthorized funds transfer using their access.
Dispensaries are vulnerable to this financial exposure as long as cash, checks, wire transfers, computer fund transfers or other financial instruments are accepted as forms of payment. The solution to this exposure is a cannabis insurance policy that includes revenue protection that’s provided by crime insurance coverage.
Reach Out to the Dispensary Insurance Firm
The cannabis industry has unique business needs that not every insurance company understands. MFE Insurance has the experience and knowledge to work with you to best protect your unique business interests with a thorough and customized insurance solution. To learn more about crime insurance and other ways to financially protect your business, contact us today.