CBD Oil And Hemp Insurance Policy Information
DISCLAIMER:: Marijuana is still classified as a Schedule I controlled substance by the U.S. Drug Enforcement Agency, and as such it remains a federal crime to grow, sell, and/or use marijuana. Any content contained herein is not intended to provide legal advice or to assist with violation of any state or federal law.
CBD Oil And Hemp Insurance. From aches and pains to anxiety relief, CBD oil has been touted as an all-natural cure-all. Because of the vast ailments that it can help to ease, and since there are very minimal side effects, countless people are turning to CBD oil as an alternative treatment for a variety of conditions.
Given the increased demand for CBD oil, you might be thinking about starting up your own business, either manufacturing or selling it. It can certainly be a lucrative business opportunity; plus, operating a business that offers CBD products can be very gratifying, as you'll providing the public with a product that can help them in a myriad of ways.
If you're thinking about starting up a CBD oil business, there are a number of things that you need to keep in mind so that you can set yourself up for success. One of the most important factors that you need to consider is insurance. Like any industry, there are a number of risks that can be associated with making or selling products that contain CBD oil.
Why do CBD manufactures and distributors need commercial CBD oil and hemp insurance? What type of coverage should they carry? Read on to find the answers to these questions so you can keep your business, your clients, your employees - and yourself - protected.
CBD oil and hemp insurance protects your cannabis business from lawsuits with rates as low as $67/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked CBD & hemp oil insurance questions:
- What Is CBD Oil And Hemp Insurance?
- How Much Does CBD Oil And Hemp Insurance Cost?
- Why Do CBD Oil & Hemp Manufacturers And Distributors Need Insurance?
- What Type Of Insurance Do CBD Oil & Hemp Manufacturers And Distributors Need?
- What Does CBD Oil And Hemp Insurance Cover & Pay For?
What Is CBD Oil And Hemp Insurance?
CBD oil is a type of extract from the hemp plant that contains high levels of cannabidiol (CBD), a non-psychoactive compound. It is used for various health and wellness purposes, including reducing anxiety, pain, and inflammation, and promoting sleep and overall wellness.
Hemp insurance is a type of insurance coverage specifically designed for businesses involved in the production, manufacturing, and distribution of hemp-based products, including CBD oil. This insurance coverage protects these businesses from various risks and liabilities, such as product recalls, lawsuits, and damage to crops or equipment. It also provides coverage for financial losses due to theft, fire, or natural disasters.
How Much Does CBD Oil And Hemp Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small CBD oil and hemp businesses ranges from $67 to $109 per month based on location, products sold, THC %, sales and experience.
Why Do CBD Oil & Hemp Manufacturers And Distributors Need Insurance?
Despite your best attempts to offer the highest quality products and to ensure that your place of business is safe for your employees and clients, there is always a chance that something will go awry.
If you sell CBD products, a client could have a bad reaction; or, if you run a facility that manufacturers CBD oil, an employee could be injured on the job, or a vendor could slip and fall while making a delivery.
These are just some of the problems that could occur. In the event that something does go wrong - a client sues you, an employee is injured, or your commercial space is vandalized or damaged in a fire, for example - you'll be legally responsible for covering the costs that are associated with mishaps.
Legal defense fees, settlements, repairing or replacing damaged or stolen property, and medical bills can be quite expensive; but, as the proprietor of your establishment, you will have to pay for these types of expenses.
If you have the right type of insurance coverage, you avoid paying such exorbitant costs out of your own pocket. Instead, in exchange for paying your premiums, the company that carries your insurance policy, will cover the expenses, up to the limits of your policy.
In other words, CBD oil and hemp insurance insurance can help you avoid financial ruin; not to mention the fact you're legally required to carry certain forms of commercial insurance.
What Type Of Insurance Do CBD Oil & Hemp Manufacturers And Distributors Need?
What type of CBD oil and hemp insurance should you carry if you are making or selling CBD and hemp products? There are several different types of coverage that you should invest in, but the following are the most important:
- Commercial General Liability - If a client claims that your product caused them harm and sues you, or if a vendor slips and falls on your property and files a suit, commercial general liability insurance will cover the expenses for you. This type of insurance will assist with legal defense fees, settlements, and any medical bills that you are responsible for.
- Commercial Property - Your warehouse or store could catch on fire, or someone could vandalize it and steal equipment and inventory. In these types of situations, commercial property insurance will help to pay for the damages and repairs to your building, as well as the cost of replacing any lost or stolen items.
- Workers compensation - If any employee sustains a work-related injury, you, the employer, will have to pay any medical care that's require, as well as cover the cost of lost wages, and possibly more. Workers' comp insurance covers these types of expenses. It pays for medical care that an employee may require, replaces the wages that he or she lost while recovering, and can even help to pay for legal defense if the employee decides to sue.
These are just some of the different types of CBD oil and hemp insurance coverage that CBD oil manufactures and sellers should carry.
CBD Oil Derived From Marijuana Risks & Exposures
The legality of CBD can vary from state to state and federally, but in general, one of the main determining factors is whether the CBD is derived from hemp or marijuana. The 2018 Farm Bill legalized the cultivation and transportation of cannabis products, including CBD oil, on a federal level - as long as the hemp being grown and transported contains 0.3% or less of the cannabinoid THC.
Introduction: Marijuana products manufacturers start with raw cannabis leaves. The stem is removed from the leaf and the leaf is cleaned and cured. Curing involves drying the leaves and sometimes adding flavoring agents. Additional processing converts the leaf into a liquid, loose-leaf, oil, powder, pill, rolled or vapor form that can be sold.
Some manufacturers develop creams, lotions, and other topically applied products that are infused with marijuana. Others may develop edibles that are made with marijuana-infused butter. As marijuana becomes more normalized, additional products will be developed.
Some research indicates that marijuana is useful in pain relief for conditions such as chemotherapy-induced nausea, glaucoma, multiple sclerosis, and neuropathy, and as an appetite stimulant for such disorders as AIDS wasting syndrome. However, the FDA has not approved it for any type of medicinal or recreational use as no studies have been done in clinical trial settings. Conducting clinical research involves the FDA along with the DEA (Drug Enforcement Administration) and the NIDA (National Institute on Drug Abuse). Concerns have been expressed as to the lack of consistency in drug purity and potency, impact on fetuses by pregnant women, and long-term usage implications such as drug dependency.
Currently, over half of the states have approved the use of medicinal marijuana under specifically defined circumstances, while nine states have approved its recreational use in small quantities. Manufacturing and distribution guidelines vary by state, as well as the form in which the product may be sold. However, the federal government continues to criminalize the growth, cultivation, and use of marijuana regardless of the circumstances. It is unclear how the differences in state and federal law will ultimately be resolved.
Premises liability exposure is normally low due to limited access by visitors. If tours are offered, visitors may be injured by slips, trips, or falls, or may be exposed to toxic or caustic chemicals. Floor coverings should be in good condition, no frayed or worn spots on carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked. Enough exits must be provided and be well marked, with backup lighting systems in case of power failure.
Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. If the business is open after dark, there should be adequate lighting and appropriate security for the area. Toxins released in a fire or fumes, spills or leaks from chemical tanks may cause serious injury or property damage to neighboring properties.
Products liability exposure is currently unknown as no long-term scientific studies have yet been completed evaluating the effects of marijuana on human health. There could be serious adverse impacts as users tend to hold the smoke in their lungs longer than tobacco smokers. However, tobacco products receive a federal exemption from most types of product liability claims as tobacco has been a known carcinogen since the 1960's.
Such an exemption is not available for marijuana manufacturers. A concern with edibles is that they are visually indistinguishable from non-marijuana infused products and packaging is attractive to children.
Environmental impairment exposures are moderate. Sudden or cumulative discharges of chemicals used as additives (which may be toxic or combustible or both) may contaminate air, surface or ground water, or soil. Disposal procedures must adhere to all EPA and other regulatory standards.
Workers compensation exposure may be high. Injuries from production machinery are common, as are burns, cuts, slips, trips, falls, hearing loss from machinery noise, and back injuries from lifting. Employees should be provided with safety equipment, trained on proper handling techniques and have conveying devises available to assist with heavy lifting. Flammable liquids and chemicals can cause skin and eye irritation.
Cumulative exposure to marijuana dust may create a potential for lung and respiratory diseases and injuries. Drivers of forklifts and vehicles may be injured in accidents. Appropriate ventilation of the facility is crucial because of the potential impairment of employees due to exposure to the product that may contribute to accidents and possible long-term health issues.
Property exposures include offices, drying facilities, processing areas, and warehouses for raw marijuana and finished goods. Ignition sources include electrical wiring, heating and air conditioning systems, dryers, and production machinery. The large draft spaces in storage warehouses can contribute to the spread of a fire. Chemical additives may be highly flammable and add to the fire load. Accumulations of dust can result in explosions. This hazard increases in the absence of well-maintained dust collection systems.
Raw goods and finished products, which are highly combustible and easily contaminated by smoke, temperature changes, and humidity, are also targeted by thieves due to the high resale value in the black market. Vandalism can result from trespassers and protestors. Appropriate security controls must be taken including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Equipment breakdown exposures include breakdown losses to production equipment, dust collection and ventilation systems, electrical control panels, and other apparatus. Breakdown and loss of use to the conveyor and other production machinery could result in a significant loss, both direct and under time element.
Crime exposures are chiefly from employee dishonesty and theft of money and securities due to the high resale value of marijuana products on the black market. Employees may act alone or in collusion with outsiders in stealing money, raw materials, or finished stock. Background checks should be conducted on all employees. There must be a separation of duties between persons handling deposits and disbursements and handling bank statements.
Inland marine exposures include accounts receivable if the manufacturer offers credit, computers (which may include computer-run production equipment), goods in transit, and valuable papers and records for customers' and suppliers' information as well as quality control testing results. Backup copies of all records should be made and stored off premises. Goods in transit may be damaged by fire, theft, collision and overturn, or contamination.
Commercial auto exposure may be moderate if the manufacturer transports raw materials or finished products. Manufacturers generally have private passenger fleets used by sales representatives. There should be written procedures regarding the private use of these vehicles by others. Drivers should have an appropriate license and an acceptable MVR. All vehicles must be well maintained with documentation kept in a central location. If the product is in the vehicle with the driver, adequate ventilation is important to prevent driving impairment.
What Does CBD Oil And Hemp Insurance Cover & Pay For?
Here are some examples of CBD Oil And Hemp Insurance claims and the corresponding insurance coverages:
1. Product Liability Claim: Let's say a customer claims that they fell ill due to your CBD oil product. They believe that the product was contaminated or improperly labelled, leading to an adverse reaction. They might sue your business for medical expenses, loss of earnings, and other damages. A CBD Oil and Hemp Insurance policy can cover legal defense costs, settlements, and judgements related to such a lawsuit, ensuring that you don't have to pay out of pocket.
2. Property Damage Claim: If your manufacturing facility experiences a fire, flood, or other disaster that results in damage to your stocks of hemp or CBD oil, you could face significant financial loss. A comprehensive insurance policy can cover the cost of repairing your premises and replacing your inventory, mitigating the financial impact of such an event.
3. Workers' Compensation Claim: Suppose an employee at your hemp farm or CBD oil manufacturing facility gets injured on the job, say, by machinery used in the production process. If the employee sues your company for medical expenses and lost wages, Workers' Compensation coverage, typically part of a broader CBD Oil and Hemp Insurance policy, could cover these costs. This would help protect your business from the financial strain of such lawsuits.
4. General Liability Claim: If a visitor slips and falls at your CBD oil retail shop and decides to sue for their injuries, a General Liability policy (often included in a broader CBD Oil and Hemp Insurance policy) could cover the legal defense costs, medical payments, and any settlement or judgement that may arise from the lawsuit.
5. Crop Insurance Claim: Hemp crops are susceptible to a variety of risks, including weather events, pests, and disease. If your crop is wiped out by such an event, a specialized hemp crop insurance policy can help cover the loss, ensuring that you have the financial resources to plant again the following season.
6. Professional Liability Claim: If you provide advice to customers on how to use CBD oil and they claim that this advice led to harm, they may sue your business. A Professional Liability policy, also known as Errors and Omissions (E&O) Insurance, could cover the costs associated with defending against such claims and any resulting settlements or judgements.
CBD Oil And Hemp Insurance - The Bottom Line
To learn more about the policies you should invest in and how much CBD oil and hemp insurance coverage you should carry, speak with a reputable insurance broker.
Additional Resources For Manufacturing Insurance
Learn all about manufacturing insurance. Manufacturers face many unique risks such as product libility and/or product recall exposures due to the nature of their business operations.
- 3D Printing
- Audio & Video Equipment
- Auto Parts
- Bottling Plants
- Brooms & Brushes
- Camping Equipment
- Canned Fruit & Vegetables
- Canvas Products
- CBD Oil And Hemp
- Clock & Watch
- Commercial Air Conditioning
- Commercial Electronics
- Communications Equipment
- Construction Equipment
- Cork Products
- Dairies & Creameries
- Down And Feather Products
- Dry Ice
- Dyes & Pigments
- Electronic Toys & Games
- Exercise Equipment
- Farm Equipment
- Feed & Grain
- Flavoring Extracts
- Frozen Foods
- Fruit Juice
- Fur Garment
- Garage Door
- Gypsum Products
- Ice Cream
- Industrial Equipment
- Iron & Steel Foundries
- Lawn Mowers
- Leather Apparel
- Leather Goods
- Lighting & Wiring
- Lumber & Wood Products
- Machine Shop
- Major Electrical Appliances
- Marijuana Products
- Mattresses & Box Springs
- Metal & Plastic Furniture
- Metal Heat Treating
- Metal Toys
- Musical Instruments
- Nonferrous Foundries
- Ornamental Metalwork
- Paper & Allied Products
- Pet Food
- Plastic & Rubber Toys
- Plastic Goods
- Plastics Molding, Forming & Extruding
- Product Liability
- Psychedelic Drugs
- Pulp & Paper Mills
- Residential Air Conditioning & Heating
- Rubber Goods
- Sawmills & Planing Mills
- Screw Machine Products
- Sheet Metal
- Soap & Detergent
- Small Electrical Appliances
- Sporting Goods
- Stone Products
- Textiles Finishing & Coating
- Tool & Die Shops
- Vegetable Juice
- Vending Machines
- Wire Rope
- Wood Furniture
- Writing Instruments
- Specialty Manufacturing
- Specialty Product Liability
The manufacturing industry is a vital part of the economy and plays a significant role in the production of goods and services. However, it is also an industry that is prone to risks and accidents, which can result in costly damages and lawsuits. Therefore, it is essential for businesses in the manufacturing industry to have insurance to protect them against potential losses.
Business insurance can cover a wide range of risks, including property damage, liability, and worker injuries. For instance, if a fire were to break out in a manufacturing facility and destroy equipment or inventory, commercial insurance could cover the costs of replacing or repairing the damages. Similarly, if a worker were to be injured on the job, business insurance could cover medical expenses and lost wages.
In addition to protecting against physical damages, insurance can also provide financial protection against legal liabilities. If a customer were to sue a manufacturing business for a faulty product, the commercial insurance could cover the costs of legal fees and settlements.
Overall, insurance is essential for the manufacturing industry as it helps to mitigate risks and protect against unexpected costs. Without it, businesses in the industry could face financial ruin in the event of an accident or lawsuit.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Employee Dishonesty, Accounts Receivable, Computers, Goods in Transit, Valuable Papers and Records, General Liability, Employee Benefits Liability, Environmental Impairment Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.