If you’re a cannabis operator in Los Angeles and you don’t have product and general liability insurance, you could pay a high price or be put out of business.
Whether you are operating in LA or California, there are essential insurance coverages you need to protect yourself, including Workers’ Compensation (state required), auto liability and umbrella policies.
A great deal of focus has been on the passage of the much-anticipated Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) last month, and now all LA-permitted cannabis operators in the city must carry product and general liability insurance.
Product liability holds the provider of a given product responsible for any injuries those products may cause. Even in the instance of a lawsuit that has been deemed frivolous in court, the time and costs associated with defending a business can be exorbitant and potentially shut down an operation. A similar degree of severity rings true for any lines of coverage that are “touching plants,” such as general liability and property insurance.
The City of Los Angeles is well aware of the State’s insurance requirements, and it will take adverse action against operators without proof of product liability coverage. There are also reports that suggest cannabis product recalls will likely increase in California as MAUCRSA regulations begin to hit cannabis operators in the state.
What to Do Now?
- Read the fine print. Product liability represents the greatest risk exposure for cannabis professionals—and the consequences of not having the right coverage can put you out of business. As the insurance market gradually comes up to speed on the specific challenges and exposures facing cannabis operations, professionals in this space will need to make sure they read their policy’s fine print before breathing easy—or else they might end up paying a big sum for little protection.
- Secure coverage as soon as possible. Recent regulatory activity has increased dramatically at the state level, and the insurance industry is dealing with an influx of cannabis operations seeking proper coverage. With this in mind—and expected delays due to a processing crunch—the best step in securing proper and now mandatory coverage is to begin the process as soon as possible.
- Work with an insurance broker experienced in the industry. This is where you need someone who knows the ins and outs of a constantly shifting regulatory landscape. It is recommended that you connect with a trusted insurance advisor who can walk you through the process and ensure that any and all of your exposures are considered and addressed.
If you have any questions on coverage, please reach out and let me know. I can help you avoid a lot of headaches and make sure you have the right coverage.