Cannabis is a rapidly growing industry and manufacturing and selling the substance for recreational purposes — in all forms — has been legal since last October. But because of government-mandated insurance requirements it has proved challenging for Canadian cannabis businesses to find the insurance coverage they need.

The cannabis sector is not new in Canada, after all the substance has been legal for medical purposes since 2001. And in many ways, that paved the way for recreational cannabis insurance products. But what is new is the manufacturing, distribution and retail of recreational cannabis.

While the federal government wrote cannabis laws and regulations, it gave provinces and territories the authority to decide how the product is sold, including where stores can be located, how they are operated, who is allowed to sell cannabis — and how much insurance businesses have to carry.

For the cannabis sector, manufacturers and retailers alike, procuring cannabis insurance is still a challenge. An added complexity was the legalization of edible cannabis products in the fall of 2019. Edible cannabis can include adding the substance to a variety of products ranging from beverages to cosmetic products, creating larger risk exposures and adding to the wide variety of risks businesses operating in the sector already have to contend with.

In Ontario, the provincial government imposed legal requirements for recall limits of $15 million. Required minimum commercial general liability insurance for retailers is also costly. These requirements can pose a struggle for brokers to place insurance for their clients as the product and its availability is still maturing in the Canadian insurance market.

As the insurance industry catches up with the need for cannabis insurance, many brokers are looking to specialty markets to find solutions to their cannabis clients’ insurance needs. At CHES Special Risk, underwriters help support brokers and work collaboratively to identify unique risk exposures and engage insurance carriers to find inspired solutions to the complex insurance needs of the cannabis sector.

To find out more about our bespoke insurance coverages and how a CHES Special Risk policy can better respond to your clients needs, please speak to your CHES underwriter or email us at quotemehappytoronto@chesspecialrisk.ca.

FAQ

What is the speciality insurance market and how can it benefit the cannabis industry?
What is the speciality insurance market and how can it benefit the cannabis industry?

The speciality insurance market consists of insurers who offer coverage for unique risks that are not typically covered by standard insurance policies. This market is well-positioned to provide insurance solutions for the cannabis industry, as they have experience covering high-risk businesses.

What are some of the unique risks faced by the cannabis industry?
What are some of the unique risks faced by the cannabis industry?

The cannabis industry faces a range of risks, including product liability, theft, property damage, and regulatory compliance. These risks can be particularly challenging to manage due to the complex and evolving nature of cannabis laws and regulations.

How can speciality insurers help the cannabis industry manage these risks?
How can speciality insurers help the cannabis industry manage these risks?

Speciality insurers can provide customized insurance policies that address the unique risks faced by the cannabis industry. These policies can be tailored to specific business needs and can help protect against financial losses resulting from unforeseen events.

Are there any specific insurance policies that are particularly important for the cannabis industry?
Are there any specific insurance policies that are particularly important for the cannabis industry?

Product liability insurance is particularly important for the cannabis industry, as it protects against financial losses resulting from claims of harm caused by cannabis products. Other important policies include property insurance, cyber liability insurance, etc.

What should cannabis businesses look for when selecting an insurance provider?
What should cannabis businesses look for when selecting an insurance provider?

When selecting an insurance provider, cannabis businesses should look for providers with experience in the industry and a deep understanding of the unique risks faced by cannabis businesses. They should also look for providers with strong financial stability and a commitment to customer service.

How can cannabis businesses ensure they are getting the best coverage for their needs?
How can cannabis businesses ensure they are getting the best coverage for their needs?

Cannabis businesses should work closely with their insurance providers to assess their risks and determine the types of coverage that are best suited to their needs. It is also important to regularly review and update insurance policies to ensure that they remain adequate and effective.

Are there any regulatory requirements that cannabis businesses must adhere to when it comes to insurance?
Are there any regulatory requirements that cannabis businesses must adhere to when it comes to insurance?

Cannabis businesses must comply with state and local regulations when it comes to insurance, including requirements related to minimum coverage levels and policy exclusions. It is important to work with an e

Can cannabis businesses with a history of insurance claims still obtain coverage?
Can cannabis businesses with a history of insurance claims still obtain coverage?

Cannabis businesses with a history of insurance claims may still be able to obtain coverage, although they may face higher premiums or exclusions. Working with an experienced insurance provider can help these businesses find the best coverage options despite their history.

What role does risk management play in securing insurance for the cannabis industry?
What role does risk management play in securing insurance for the cannabis industry?

Effective risk management is critical for securing insurance coverage in the cannabis industry. By implementing strong risk management practices, businesses can reduce their risks and demonstrate their commitment to minimizing potential losses.

How can cannabis businesses stay up-to-date on changes in insurance regulations and requirements?
How can cannabis businesses stay up-to-date on changes in insurance regulations and requirements?

Cannabis businesses can stay up-to-date on changes in insurance regulations and requirements by working closely with an experienced insurance provider like CHES Special Risk, attending industry conferences and events, and monitoring industry news and updates.

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