Marijuana Products Manufacturers 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.
Marijuana Products Manufacturers Insurance. As the legalization of cannabis products sweeps across the globe, this booming industry is bringing increasing product variety to consumers.
CBD oil, itself available in multiple forms including tinctures and tablets, has been shown to be a promising form of alternative medicine in the battle against chronic pain, cancer-related nausea, and sleep disorders. Its potential applications are still being explored, and are likely to grow in the near future.
Marijuana is also growing as an ingredient in skincare and other personal care products, and appearing in beverages, chocolates, and gummy candies. Cannabis-based treats are even being developed for dogs suffering from various health conditions.
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.
Now is a truly exciting time to own and operate a company that manufactures marijuana products, as a pioneer in one of the world's most rapidly emerging fields. Just like any other business, however, cannabis-product manufacturers will need a key partner to protect their assets, in the form of a comprehensive insurance plan.
What do you need to know about marijuana products manufacturers insurance coverage options in this field, which is still in its infancy and would not have been considered lawful until recently? What types of insurance are absolutely essential for a business that manufactures marijuana products?
Marijuana products manufacturers insurance protects your cannabis manufacturing business from lawsuits with rates as low as $87/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked marijuana products manufacturing insurance questions:
- What Is Marijuana Products Manufacturers Insurance?
- How Much Does Marijuana Products Manufacturers Insurance Cost?
- Why Do Marijuana Products Manufacturers Need Insurance?
- What Type Of Insurance Do Marijuana Products Manufacturers Need?
- What Does Marijuana Products Manufacturers Insurance Cover & Pay For?
What Is Marijuana Products Manufacturers Insurance?
Marijuana products manufacturers insurance is a type of insurance coverage specifically designed for companies that manufacture and distribute marijuana-related products. It covers risks associated with the production and sale of marijuana, including product liability, property damage, theft, and other potential losses.
This insurance is designed to protect the financial interests of the manufacturer and ensure they are able to continue their operations in the event of unexpected losses. It is important for marijuana product manufacturers to have this insurance to protect themselves and their businesses against potential lawsuits and financial losses.
How Much Does Marijuana Products Manufacturers Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small marijuana products manufacturing businesses ranges from $87 to $159 per month based on location, size, revenue, claims history and more.
Why Do Marijuana Products Manufacturers Need Insurance?
All business owners face numerous risks and liabilities, and the budding marijuana product industry is no different. Some of the hazards you will be exposed to in your field will be familiar to any business owner, and those would include theft, vandalism, accidental damage to your property or equipment during the manufacturing process, and acts of nature such as wildfires, floods, and earthquakes.
The potential that employees or third parties could become injured within your facility is another risk to consider. Other pitfalls are unique to the marijuana products industry, and potential lawsuits from consumers who experience unexpected or unintended symptoms after exposure to your products have a place near the top of the list.
Every business owner hopes that these disaster scenarios will not strike their company, but hoping is not enough. If circumstances beyond your control do cast a shadow on your marijuana products business, you need to be prepared and covered.
With marijuana products still remaining unapproved by the FDA, companies within this industry are likely to face unique challenges when trying to obtain appropriate marijuana products manufacturers insurance coverage.
That is why it is essential to partner with a commercial insurance agent who has a deeper understanding of the cannabis industry, and who can help you get your insurance needs met.
What Type Of Insurance Do Marijuana Products Manufacturers Need?
Marijuana products manufacturers insurance plans can and should be tailored to meet every company's exact needs, and the specific plans you should consider opting for depend on the size of your company, its location, the number of employees you have, and the precise nature and scope of your activities.
Regardless of those factors, you will certainly need these four types of marijuana products manufacturers insurance:
- Commercial General Liability: This type of insurance serves to protect your business should a third party become injured on your property, or you are held responsible for damage to third-party property. It will help cover settlement costs as well as legal expenses.
- Commercial Property: Another type of insurance no business can do without, commercial property insurance, at its basic level, protects you from financial losses resulting from damage to your building. This can be caused by events such as fires, theft, and vandalism. Commercial property insurance can also cover the contents of your property. In the case of the marijuana products industry, this may mean your machinery or equipment, but not your raw materials or inventory.
- Workers' Compensation: A type of insurance that will cover the medical costs and loss of wages of employees who sustain injuries in the workplace, workers' compensation insurance also plays an essential role in safeguarding your company against legal action.
- Marijuana Products Liability: Marijuana products remain difficult to insure, but this type of insurance will protect you from catastrophic financial loss in the event your raw materials or finished products are damaged or otherwise lost.
These are just some of the types of marijuana products manufacturers insurance coverage you should carry.
Marijuana Products Manufacturing's Risks & Exposures
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.
Business 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 Marijuana Products Manufacturers Insurance Cover & Pay For?
1. Product Liability: If a consumer claims to have been harmed by a marijuana product, the manufacturer may face a product liability lawsuit. This could be due to alleged defects in the product, inaccurate labeling, or failure to warn consumers about potential risks. Product liability insurance is designed to cover these types of claims, and can help pay for legal defense costs, settlements, and judgements related to such lawsuits.
2. Non-compliance With Regulations: Marijuana products are subject to a complex web of state, federal, and local regulations. Non-compliance with these regulations can result in significant legal trouble for manufacturers. Regulatory legal expense insurance can help cover the costs associated with defending against regulatory actions and any penalties or fines that may be levied.
3. Employment Practices Liability: Manufacturers, like any other business, can face lawsuits related to their employment practices. This could include claims of discrimination, harassment, wrongful termination, or wage disputes. Employment practices liability insurance can cover the costs of defending against such lawsuits and any settlements or judgements that result.
4. General Liability: If a third party suffers injury or property damage related to the manufacturer's operations, the manufacturer could face a lawsuit. This could be a delivery person slipping and falling at the manufacturing facility, or damage caused to a neighboring property. General liability insurance can cover the costs of such lawsuits, including legal defense costs, settlements, and judgements.
5. Directors and Officers Liability: Marijuana product manufacturers can be sued for alleged mismanagement, breach of fiduciary duty, or other actions by their directors and officers. This could come from shareholders, employees, competitors, or regulators. Directors and officers liability insurance can cover the legal defense costs, settlements, and judgements associated with such lawsuits.
6. Intellectual Property Infringement: If a manufacturer is accused of infringing on another company's patents, trademarks, or copyrights, they could face a lawsuit. Intellectual property insurance can help cover the costs of defending against such claims, as well as any settlements or judgements that may result.
It's important to note that while insurance can provide significant protection for marijuana product manufacturers, it's not a substitute for implementing robust risk management practices, complying with all applicable regulations, and maintaining high product safety standards.
Commercial Insurance And Business Industry Classification
- SIC CODE: None
- NAICS CODE: None
- Note: SIC and NAICS codes are assigned by the US Government. Because this product remains illegal, no codes have been assigned.
- Suggested ISO General Liability Code(s): None
- Suggested Workers Compensation Code(s): None
- Note: ISO and NCCI have not provided any codes specifically for marijuana products.
Marijuana Products Manufacturers Insurance - The Bottom Line
Not all marijuana products manufacturers insurance polices have the same limits, exclusions and coverage. Because businesses who manufacture cannabis products are likely to find it hard to get their insurance needs appropriately met, it is of utmost importance that you find the right commercial 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.