Cannabis Business Insurance
Commercial crime insurance policies protect cannabis businesses against the theft of a company’s cash or securities, or their client’s money or assets while in the company’s possession or control.
Each company within the cannabis vertical has crime exposure. In fact, studies have shown a large portion of crime in the cannabis industry is committed by company insiders.
A typical commercial crime policy is divided into several coverage parts. A company may buy one or all coverage parts depending upon the industry and the carrier. A summary of crime coverage is as follows:
Social Engineering Fraud/E-Theft/E-Crime
Forgery & Alteration
Fraudulent Money Orders
Wire Transfer Fraud
Assets/Monies in Transit
Theft of Client’s Property of Securities
US companies lost an estimated $50 billion in 2019 due to employee fraud. Recent studies have confirmed most of the harm comes from employees, not from a disreputable bookkeeper.
Why Does a Cannabis Business Need Commercial Crime Insurance?
Most companies hire trustworthy employees and have solid internal controls prevent theft of their assets and products. However, trusted individuals can and do steal and assets or products are at risk of robbery and theft. Cyber/electronic theft is a growing area for commercial crimes due to wire transfer fraud and social engineering.
A carefully crafted crime insurance policy can protect a company from such losses. A standalone commercial crime policy is a must for any company especially those operating with large amounts of cash.
Get the Cannabis Commercial Crime Insurance Guide
Notable Coverage Features and Exclusions
Cannabis commercial crime policies are in the early developmental phase. Insurance carriers are slowly making their entrance into this line of insurance; yet there have been a few companies willing to provide coverage to cannabis companies to reduce their crime liability.
Acts of Owners
Indirect or Consequential Loss
Audit and Claims Expense
Specific Exclusions – Product and Inventory
Cannabis Loss Discovered vs Loss Sustained
Stolen Corporate Funds
A cannabis company executive delegated her assistant to set up travel arrangements and gave the assistant a corporate credit card and account information for payment. The assistant used the given information to make purchases. The executive was out roughly $800,000 as a result of the assistant’s actions. Fortunately, a commercial crime policy would help cover claims costs and indemnity in this situation.
Stolen Corporate Funds
An armed robbery at a small dispensary resulted in a loss of roughly $75,000 in inventory and $50,000 in cash. The insured was unsure if their insurance policy would provide coverage for the loss after it was determined an employee had coordinated the robbery. Fortunately, the insured’s cannabis-specific commercial crime policy provided coverage for the loss of securities located inside the premises resulting directly from theft and the loss of property located inside the premises resulting from an actual robbery.