“We could see an uptick in product claims related to acute bodily injury, whether it be from allergic reactions, poor labeling, or incorrect dosage yield….in the age of social inflation, these claims are becoming all too common.”
Keith Distel, Casualty Team Leader and Marijuana Liability Subject Matter Expert of Admiral Insurance, and Ben Rozema, Director of Programs at Topa Insurance, spoke with Cannasure about risk management in the cannabis industry.
In their view, security is the most critical area of loss control and risk management. Strong security protocols and training, especially regarding unarmed and armed security, should serve as a foundation for any program. Says Distel, “This is a high cash business… If an operator can’t meet security standards and aren’t mindful of the community they’re operating in, they become difficult to insure.”
He stresses that cannabis operators should leave security to third party contractors. He also recommends that hiring of seasonal or temporary workers be kept to a minimum. “Hiring individuals in this uncontrolled nature increases the likelihood of theft, assault & battery incidents, and product tampering.”
The recent looting sprees that have taken advantage of civil unrest across the country have made the importance of security even more imperative. Says Rozema, “Dispensaries have been targets and lack of fast police response can drive up claims severity.” Even in peaceful times, he has found that the largest amount of claims suffered tend to be attempted break-ins that are often unsuccessful due to security measures.
Potential product claims are another key focus for risk management and loss control. As more brands produce unique delivery methods for cannabis consumption (eg, THC inhalers or bath balms), product consistency, quality and safety is more important than ever. Says Distel, “We could see an uptick in product claims related to acute bodily injury, whether it be from allergic reactions, poor labeling, or incorrect dosage yield….in the age of social inflation, these claims are becoming all too common.” He recommends companies have an internal testing lab for the operator’s own products or an affiliation with a reputable third party testing lab to meet high product quality and purity standards.