Tag Archives: HUB

Digital Insurance Solutions are Ripe for Fast-Growing Cannabis Dispensaries

By Jay Virdi
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Cannabis sales in the United States are expected to hit $100 billion by 2030, and yet dispensary owners still face hurdles before getting up and running, namely obtaining the right insurance coverage. Unlike a coffee shop or clothing store, it can be difficult to secure the insurance coverage needed to satisfy the requirements prescribed by the state and/or commercial leasing agreements.

Yet a simple answer to the dilemma exists. Increasing demand for cannabis business owner policies has prompted some retail insurance brokers to provide convenient turnkey solutions via digital commercial insurance platforms. These platforms circumvent the traditional underwriting process that could trudge on for weeks, allowing cannabis businesses to ramp up operations sooner.

Currently about 30% of insurance customers interact with and purchase from their insurance provider digitally for their business needs. This can be a game changer for a fast-growing cannabis business operator.

What do you need to obtain insurance online?

Obtaining insurance online lets dispensaries secure a complete, holistic insurance policy in one quick pass to cover the industry’s unique risks.

Increasing demand for cannabis policies has prompted some insurance brokers to offer digital solutions

Like any other commercial business package policy, you’ll need to provide details about your business and its operations when harnessing a digital insurance platform.

The first piece of information needed will be proof of licensing with the applicable state or commonwealth where the business operates. This piece is critical since cannabis is still illegal at the federal level. In addition, businesses will need to have other basic data on hand before finding coverage online, including:

  • The legal name of the business
  • Tax identification number
  • Operating locations
  • Annual or monthly sales projections
  • Number of employees

A Closer Look at Cannabis Coverages

Crime, extreme wealth conditions and legal challenges count among the risks faced by cannabis dispensaries. Here are three essential coverages important for cannabis business owners and operators.

  1. Commercial property insurance. Owned cannabis dispensary properties can face perils such as fire, storms, theft and vandalism. Buildings hold value and need to be repaired or replaced if any adverse events occur. Leased properties may contain equipment and fixtures owned by the business and subject to the very same hazards. Commercial property coverage can help cover the cost of replacing business contents and inventory if damaged through a peril covered by the policy.
  2. General liability insurance. Cannabis retail outlets experience a high volume of foot traffic from customers, vendors and technicians, for example. As such, trips, slips and falls could occur and lead to lawsuits. General liability insurance helps cover legal defense costs should any of these parties seek to recover compensatory damages from accidents and mishaps on the property or occurring elsewhere in a business-related capacity.
  3. Product liability coverage. Issues such as quality control with infused products and concentrates can be a concern for cannabis purveyors. Lawsuits arising from mislabeled or improperly tested products likewise need to be defended by cannabis businesses. Comprehensive product liability coverage can meet the needs of cannabis dispensaries promoting and selling a unique variety of product offerings.

Outside the standard commercial package offering, dispensaries can opt for coverage such as business interruption insurance, which helps pay overhead costs if the operation must temporarily cease due to a covered peril.

Cannabis businesses also often need to retain workers compensation insurance that helps pay for lost time and/or medical bills incurred by employees who become ill or injured on the job. Commercial crime policies help cover losses that may occur on premises or in transit in a cash-centric business.

If cannabis industry owners and managers use an online platform for their insurance needs, they could secure a certificate of insurance in as little as 24-48 hours. HUB’s digital commercial insurance platform, powered by Insureon, is one such direct-to-consumer solution. The platform is ideal for licensed retail cannabis dispensaries in all legal US states.

Facing Cybersecurity Risk? Here are 6 Ways to Minimize it.

By Brian J. Schnese
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The cannabis industry is the latest target for cybercriminals. Why? Because many cannabis operations employ less than 100 workers and few are equipped with sophisticated IT systems and knowledgeable on-staff IT personnel, so they are often easier to exploit.

Add the all-cash nature of the business, along with the large amounts of protected health data and personally identifiable information medical dispensaries may store and the industry’s shift toward operational automation to increase yields and lower labor costs and you’ve got an industry that’s extremely vulnerable and a prime target for cyber extortion.

Safeguard your corporate networks and internet connections by encrypting information and using a firewall.

Take the cannabis businesses in Ontario that lost millions after a local distributor was hit by a cyberattack and was incapable to process or deliver orders to local retailers. In another cyberattack, hackers stole $3.6 million that an Australian medicinal cannabis firm intended to send to an overseas contractor.

A still prevalent tactic is for hackers to target workers with email-based phishing scams that enable the installation of malware or ransomware to obtain protected health information to sell or lists of high-profile clients to extort.

While there’s a lot to fear and be on the alert for, there’s also a lot that cannabis businesses can do to both reduce their risk of an attack and proactively protect themselves.

Six hallmarks of a strong cyber-defense program:

  1. Assess the risk. One place to start building a comprehensive approach to cybersecurity is to conduct an appropriate cyber vulnerability or risk assessment of your cannabis business. This exercise can reveal gaps, but it also helps prioritize your effort and develop a vision for your goal state.
  2. Train and test. Train employees on the importance of cybersecurity. Make sure employees undergo phishing training and conduct refresher courses at least annually. Then, test them. Are employees retaining the information shared in training? Send simulated phishing emails and track performance to determine if training hits the mark.
  3. Secure the perimeter. Safeguard your corporate networks and internet connections by encrypting information and using a firewall. If your employees work remotely, consider use of a Virtual Private Network (VPN) to allow them to safely connect to your network from out of the office.
  4. Engage protective tools. In addition to using antivirus software and keeping all software updated and patched, multifactor authentication (MFA) and endpoint detection and response (EDR) are crucial for maintaining a secure network. Most carriers require MFA for remote network access, on email, and to protect privileged user accounts. EDR monitoring of devices connecting to the network is also increasingly a minimum requirement for insurance coverage.
  5. Develop a backup strategy. A solid data backup strategy makes companies less susceptible to ransomware attacks by allowing organizations to restore operations. Perform frequent backups — every day if possible — and consider leveraging cloud solutions along with storing backups in an immutable state off-site or off-network.
  6. Build an incident response plan. Cannabis companies should have a plan for responding to an attack, a system for validating what happened and the resources to remediate the issue.

What if a breach occurs?

Even with a great incident response plan in place, the road to recovery from a cyberattack is a complex and rapidly evolving landscape. Should we communicate with the threat actor? Should we pay the ransom demand? How do we capture forensic evidence? What are the laws guiding notification of impacted employees or clients?  When an organization has armed itself with a cyber insurance policy, they not only transfer much of their risk, but they often gain access to a carrier panel of specialized response providers that include breach coaches, forensic investigations firms and privacy attorneys.

In addition to leveraging the specialized post-breach expertise offered by carriers, insureds should also consider familiarizing themselves with and leveraging any pre-breach resources provided, which often include no-cost external vulnerability scans, employee awareness training and discounted technical security solutions.

HUB International Announces New Cannabis Specialty Leader

By Cannabis Industry Journal Staff
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HUB International, a leading insurance brokerage serving the cannabis industry, just announced today their new U.S. cannabis specialty leader. Bradley Rutt, senior vice president at HUB and Cannabis Industry Journal contributor, will now take the lead on cannabis insurance for the brokerage.

Bradley Rutt, senior vice president and U.S. cannabis specialty leader at HUB International

Rutt will work alongside Jay Virdi, another frequent CIJ contributor and chief sales officer of cannabis specialty at HUB to support the practice strategy on a national level. Rutt’s role will put him in charge of expanding HUB’s growth in the cannabis space as well as “enhancing cannabis insurance solutions and risk services, further developing cutting-edge resources for clients to support their needs, and attracting and retaining talent to deepen knowledge and expertise to help cannabis clients thrive.”

Rutt’s role as senior vice president has been to specialize in cannabis executive liability, working with public and private management services organizations to develop insurance and risk management programs. “Brad is an industry leader, and his diverse experience and deep understanding of the cannabis industry to insure its unique risks will play a critical role in continuing to strengthen our practice,” says Jay Virdi. “More importantly, we continue our commitment as trusted advisors to our clients to provide them with relevant support and solutions to help them continue to grow.”

Cannabis Industry Journal

Cannabis Property Coverage: Understanding Risk Management & Communication

By Bradley Rutt
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Cannabis Industry Journal

For cannabis companies, property coverage can cost as much as seven to 10 times what traditional manufacturing and retail outlets pay. That is, of course, because of the inherent hazards involved in manufacturing and selling cannabis, in a difficult insurance market.

For landlords and building owners, taking in a cannabis tenant can be tricky as well. Because of the higher theft and manufacturing risks, many underwriters are unwilling to offer coverage. And, failure by a landlord to disclose a cannabis tenant is likely to result in a denied claim. Keeping property coverage in check by implementing risk management best practices and working to expand coverage and reduce premium costs can propel a cannabis business even further.  

Moreover, some landlords and building owners will require businesses to maintain occurrence-based liability coverage, which is harder to secure when running a cannabis operation. An occurrence-based liability policy is one that covers the renter for an accident occurring during the policy period, regardless of when a claim is made.

Instead, some insurance companies will only cover cannabis business’ high risks with a claims-made policy, or one in which claims must be made during the policy period only. Landlords will often stipulate their requirement for an occurrence-based policy in their lease. That means that cannabis businesses with a claims-made policy could unknowingly be in violation of their lease.

These issues and others have allowed landlords to command premium rent from cannabis business owners who find obtaining the right property coverage difficult.

To calm the rising tide of rent and property coverage costs, cannabis business owners and operators can engage in the following risk management considerations.

 Risk Management Considerations for Facilities with a Cannabis Operation 

Carriers are more likely to provide a policy to cannabis businesses that are doing what they can to minimize their risk. Here are six ways cannabis businesses can reduce their costs, minimize exclusions and obtain broader property coverage.

  1. If you are a retailer, have a plan to prevent or respond in the event of a robbery.
  2. Install and know how to use vaults and safes properly.
  3. Install central station alarms, cameras and other safeguards. Have them tied to your phone for easy access.
  4. Depending on the nature of the operations, install and regularly test fire sprinklers on site to make sure they are in working order.
  5. Consider hiring a third party, properly-insured, armed guard to safeguard your storefront on a regular basis.
  6. Institute industry-known best practices for high-risk manufacturing processes, like oil extraction.

Insurance Considerations for Facilities with a Cannabis Operation 

Risk management is critical to controlling risk, and insurance considerations can help your cannabis business obtain broader coverage and reduce premium costs.

  1. Communicate with your insurance broker.If you’re a landlord and you want to rent to a cannabis tenant, have a conversation with your insurance carrier at least 30 days before the lease begins. Even if you do, there’s a good chance that your carrier will issue a notice of cancellation (NOC) because they don’t want to engage with cannabis risk. On the other hand, if you don’t disclose the new tenant risk, should a claim be filed, it will could be denied, and the non-disclosure could cost you your policy.
  2. Engage a broker/carrier that specializes in cannabis.In such a volatile market, it is important to work with a broker and carrier that specialize in cannabis. This will enable hidden exclusions to be removed and help you procure the best policy and pricing possible for your organization.
  3. Tell your insurance “story.”Let the carrier understand your business and its risks by telling them your “story.” Tell them what your business does well, including current risk management practices and how you’ve been able to reduce claims. This will go a long way toward potentially minimizing premium costs and exclusions and obtaining broader coverage.
  4. Get another set of eyes. Most carriers will require a lengthy application from cannabis businesses in which the carrier may require the business to comply with certain requirements like having an approved safe or vault room. Your business will be held to the requirements stipulated in the application should you sign and submit it. Ask your broker or a reliable attorney to review the contract for anything you may have missed. Some carriers will incorporate the submitted application into the policy. Any changes between policy inception and a claim could cause coverage issues.

The fast-growing nature of the cannabis industry has ushered in a new set of challenges for business owners and operators. Keeping property coverage in check by implementing risk management best practices and working to expand coverage and reduce premium costs can propel a cannabis business even further.