Top Claims Filed in the Cannabis Industry

 

Top Claims Filed in the Cannabis Industry and How to Avoid Them

Running a cannabis business comes with its risks. 🌿 From product issues to theft, claims can appear when you least expect them. They can also be expensive if you’re not ready. The good news? Knowing the most common claims and how to avoid them can save you trouble. Let’s break it down.

1. Product Liability Claims

Have you heard of a customer suing over a product that caused harm or didn’t meet expectations? This is one of the most frequent claims in the cannabis industry. Product liability claims can arise if:

• A product is contaminated (e.g., mold, pesticides, or harmful substances).
• Packaging or labeling is misleading (like incorrect dosage information).
• A product causes unexpected side effects.

How to Avoid It:

• Test your products. Regular testing ensures quality and safety. Work with licensed labs to meet standards.
• Label clearly. Include dosage, ingredients, and usage instructions. Follow state regulations.
• Document processes. Keep records of testing, quality control, and packaging. This protects you if claims arise.

How to Avoid It:

• Test your products. Regular testing ensures quality and safety. Work with licensed labs to meet standards.
• Label clearly. Include dosage, ingredients, and usage instructions. Follow state regulations.
• Document processes. Keep records of testing, quality control, and packaging. This protects you if claims arise.

2. Theft and Vandalism Claims

Cannabis businesses are often targets for theft since many operate with cash. Burglaries, vandalism, or even employee theft can cause significant losses.

How to Avoid It:

• Install security. Use high-quality cameras, alarms, and controlled access systems.
• Secure inventory. Lock storage units and follow state protocols for storing products.
• Train staff. Teach employees about security and how to spot suspicious activity.
• Vet employees. Background checks help build a reliable team.

3. Property Damage Claims

Property damage is a big risk for cannabis businesses. Fires, water damage, or natural disasters can be costly, especially for cultivators with expensive equipment and crops.

How to Avoid It:

• Maintain equipment. Check electrical systems, HVAC, and irrigation to prevent issues.
• Plan for disasters. Have protocols for emergencies like fires or floods. Train your staff.
• Get insurance. Work with a broker to ensure property coverage includes crop protection if needed.

4. Employee-Related Claims

Employees are vital to your business, but claims like workplace accidents, discrimination, or wrongful termination can lead to lawsuits.

How to Avoid It:

• Train employees. Teach safety and proper equipment use.
• Have clear policies. Provide an employee handbook outlining policies on harassment, discrimination, and termination.
• Get workers’ comp insurance. This protects both you and employees in case of injuries.

5. Crop Damage Claims

For cultivators, crop loss is one of the biggest risks. Pests, mold, or weather can wipe out a harvest and cause financial trouble.

How to Avoid It:

• Control the environment. Use ventilation, humidity control, and pest management systems.
• Inspect plants regularly. Catch pests, mold, or disease early and act fast.
• Ensure proper coverage. Not all property insurance includes crop protection. Double-check your policy.

How Insurance Can Protect You

Even with precautions, claims can still happen. That’s why the right insurance is essential. Consider these options:

• General Liability Insurance: Covers claims for injuries or damages caused by your business.
• Product Liability Insurance: Protects against product-related claims.
• Property Insurance: Covers your buildings and equipment.
• Workers’ Compensation Insurance: Covers employee injuries on the job.
• Crop Insurance: Helps cultivators recover from crop loss.

PM Insurance Services- understands the cannabis industry and can help you build a policy that covers your specific risks.

Claims happen, but preparation makes all the difference. Understanding the top risks and taking steps to avoid them helps keep your business safe. Focus on what you do best—growing your business—while staying protected.

Need help finding the right coverage? 🌿 Let’s chat and make sure your cannabis business has the protection it needs.