Key Risks and Insurance Considerations for Businesses in the Hemp and CBD Industry

One of the fastest-growing industries today is cannabis, which includes medical CBD and hemp. CBD products can come from both hemp and non-hemp plants within the cannabis family. Thousands of products can be made from the plant as countless new companies enter the market. Insurance for CBD and hemp industry businesses is essential, considering the social, regulatory, and financial risks involved.

Industry risks

Every business faces various risks, depending on budget, processes, machinery, and people. A CBD or hemp company has additional risks on top of common business risks. The production and testing of CBD and hemp products have faced strict oversight from the federal government. There are also regulatory restrictions on CBD or hemp products crossing state lines. Businesses that harvest hemp must be properly certified in accordance with the 2018 Farm Bill.

Aside from regulatory compliance challenges, products related to cannabis still face opposition from various social groups due to decades of misleading propaganda. Many people who haven't read recent scientific research on the plant's medical benefits still view it as illegal and immoral. This perception can potentially hurt a CBD or hemp company's reputation.

One of the key financial risks for hemp growers is that crops can get wiped out due to climate change events. Equipment breakdowns can be costly. Transporting CBD or hemp products raises numerous concerns involving compliance, product damage, and volatile fuel costs.

Coverage Solutions

A hemp or CBD firm can protect itself by getting the right customized insurance policy. Working with an insurance expert who understands the cannabis industry has big advantages. Here are some of the different types of coverage for your CBD or hemp business to consider.

• Commercial property - This insurance is necessary if you own a commercial building or land allotted for commercial use. The coverage protects your structures and the contents within them, such as production equipment. Various disasters such as storms, fire, and vandalism are covered.
• General liability - Another common type of business insurance is commercial general liability, which pays for legal costs if your company gets sued. It pays for injuries to customers and other third parties that occur at your establishment.
• Business income - It's nice to have coverage in place that pays for lost income if your business is forced to shut down due to a disaster. Business income coverage may also pay relocation costs.
• Product liability - If a customer is somehow injured by your CBD or hemp product, they may try to sue your company. Product liability coverage pays these legal costs but has limitations, as it doesn't pay for cases involving inaccurate labeling.
• Equipment breakdown - When equipment for growing hemp breaks down, you may need to rent replacement equipment. Since your commercial property plan won't cover equipment breakdowns, it's resourceful to add equipment breakdown coverage to your insurance plan.
• Inland marine - Transporting equipment or products has risks involved with crashes and slowdowns. Inland marine insurance pays for damages that happen in transit to a business-related destination.

Learn More About Hemp and CBD Coverage with GrayStone Insurance Group

Would you like to find out more about insuring your hemp or CBD enterprise? Contact us today at GraysStone Insurance Group. Our experts will help you understand your options involving insurance for CBD and hemp industry businesses.