A software company in Fort Lauderdale builds inventory tracking systems for medical marijuana treatment centers. The founders never touch the plant, so they assume cannabis insurance is a problem for their clients, not for them. Then their largest client asks for a certificate showing general liability, cyber and errors and omissions coverage with the treatment center named as an additional insured, and the company’s existing carrier declines to add the endorsement once it learns who the client is. Whether a business needs cannabis insurance depends less on whether it sells cannabis than on how closely it is tied to the industry.
Plant-Touching Businesses Need It Without Question
In Florida, the businesses that grow, process and sell medical marijuana are licensed Medical Marijuana Treatment Centers. They cultivate the plant, manufacture products, run dispensaries and deliver to patients. Every one of those activities creates exposure that a standard business policy is not designed to handle, and most standard carriers will not write it at all because marijuana remains illegal under federal law. A treatment center needs a program built for the industry, usually placed with specialty and surplus lines markets.
Ancillary Businesses Often Need It Too
The larger group of businesses that serve the industry without touching the plant is where the question gets harder. Landlords, security companies, contractors, testing labs, equipment suppliers, packaging companies, consultants and software providers may be able to buy standard coverage, but only if the carrier knows about the cannabis connection and agrees to cover it. Many standard policies exclude cannabis-related operations, and a carrier that learns about the connection after a claim can deny it.
The practical answer for an ancillary business is to disclose the cannabis work, confirm in writing that the policy covers it and, if the current carrier will not, move to a market that will. For some ancillary businesses that means a specialty policy; for others it means a standard carrier with an endorsement that addresses the exposure.
Hemp and CBD Businesses
Hemp and CBD products are regulated separately from medical marijuana in Florida, and the businesses that sell them operate under different rules. Many insurers still group them with cannabis and underwrite them with similar caution, especially when the products include edibles, vapes or anything inhaled. A smoke shop or wellness store selling CBD should make sure its product liability actually includes those products. Our smoke shop and CBD insurance page covers that side of the market.
What Makes Coverage Necessary in Practice
Florida law does not set one insurance requirement that applies to every cannabis business, but coverage becomes mandatory quickly once the business operates. Workers’ compensation is required once a business has four or more employees. Vehicles need the coverage Florida requires for registration, and delivery operations need commercial auto. Landlords require liability and property coverage in the lease, lenders require property coverage on financed buildings and equipment, and clients and vendors require certificates before they sign contracts. Our article on cannabis insurance requirements in Florida goes through who requires what.
The Coverages Most Cannabis Businesses Carry
General liability covers injuries and property damage at the premises and from operations. Product liability covers claims that a product caused harm, and for any business that makes or sells cannabis products it is usually the most important coverage. Property insurance covers the building, improvements, equipment and inventory, and crime coverage protects the cash and products that cannabis businesses handle. Workers’ compensation, commercial auto, cyber, employment practices and directors and officers coverage round out the program depending on the operation. The cannabis insurance page explains how these fit together.
Worth Confirming for Your Business
- Does your current carrier know about your cannabis-related work, and has it confirmed coverage in writing?
- Do any of your policies contain a cannabis or controlled substance exclusion?
- Do your clients, landlord or lender require specific coverages or additional insured status?
- If you sell hemp or CBD products, does your product liability include them?
- Do you have four or more employees and workers’ compensation in place?
Talk to Prestige Insurance Group
We place cannabis and cannabis-related businesses with markets that write the industry, and we help ancillary businesses confirm their coverage actually extends to the work they do. Call the office nearest you. Se habla español.
Miami: 305-969-8776
Orlando: 407-993-2331
This article is general information and not legal advice. Florida’s medical marijuana and hemp rules change; consult the appropriate state agency or qualified counsel about your situation.
