Your cannabis shipment is on the way to your facility. Whose responsibility is it to insure the goods? The distributor, grower or manufacturer?
Under standard property policies, your goods are insured while at your place of business. So, what about goods that are being transported between two locations or from/to your vendors? What if a shipment is damaged or stolen while traveling? Your goods are insured, right?
Not so fast. Make sure you read your contracts with the distributors. Most standard policies have exclusions that limit liability when materials are “in transit,” which can mean your shipment traveling in a truck or sitting on a loading dock. With sensitive materials like cannabis products, there is an increased risk of theft. Many cannabis businesses rely on multiple forms of security at their establishments, but how do you protect your investment when it is between places?
Insurance carriers do have a solution for companies that have valuable products that need to move between locations. Inland Marine insurance, also known as “goods-in-transit” insurance, is a limited insurance policy that provides financial remuneration if your cargo is damaged or stolen while “on the move” (underwriting varies on coverage).
However, getting the proper Inland Marine policy depends greatly on both what is being transported, how far and in what manner.
First, Inland Marine policies will vary based on the type of cargo that is being moved. Equipment, machinery and materials may have a relatively straightforward policy similar to many other non-cannabis businesses. Alternately, fragile products such as seeds, plants, edibles and oils may require specialized refrigeration or risk spoilage and have higher premiums as a result.
Second, though cannabis is legal for medicinal and/or recreational use in 30 states, it remains illegal at the federal level and therefore illegal to move across state lines or out of the country. Additionally, some types of equipment may be considered “paraphernalia” and might also be subject to certain guidelines. Any Inland Marine policy will have requirements that you maintain all state and federal laws for proper coverage, so make sure your insurance broker knows exactly what is to be transported before searching for a policy for you.
Finally, the method of transit is important and policies can depend on taking the proper precautions during transit. Furniture, machinery and equipment may only require that they be properly boxed for transit and can be moved using your own vehicles. However, in other cases, sensitive materials, such as product or money, may require additional security measures for proper transportation.
If you have additional questions about Inland Marine insurance and how it may affect your business, please feel free to check out our Cannabis Industry page, reach out to me at 626.703.1556 or just email me at ctobin@boltonco.com.
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