As Online Platforms like Shopify Welcome CBD and Hemp Sales, Here’s What Retailers Need to Know about Product Liability

Shopify, the nation’s third-largest online shopping platform, announced recently that it would open its doors to cannabidiol (CBD) retailers, meaning hemp and hemp-derived CBD products will now be distributed alongside 800,000 global Shopify merchants.

With brands eager to enter the emerging space, what does this mean for their insurance policies?

Businesses and entrepreneurs are taking advantage of CBD’s increasing popularity, and demand for product liability insurance has increased dramatically. Unfortunately, the market for this specific insurance remains narrow.

Often times, brokerages remain unaware of the specifics that come with distributing CBD products and can’t provide the necessary coverage to properly protect these businesses. Because of this narrow market, many small businesses and entrepreneurs lack the resources to find adequate brokers who can provide them coverage that remains within their budgets.

Additionally, many larger online marketplaces require increased liability limits. For example, Whole Foods requires CBD retailers to increase their coverage by $7 million in order to distribute their products in their stores.

Although this may seem like the price that companies must pay to sell goods under such a wide distribution umbrella, it can quickly become too costly for small businesses.

CBD is Shaking Things Up

CBD has taken the pharmaceutical, beauty and food industries by storm, with studies showing that the industry will reach $20 billion by 2024. And while Shopify’s announcement holds many positive implications for businesses operating and looking to operate in the CBD space, navigating the specific regulations that come with distributing CBD products can prove to be costly and confusing.

It’s crucial that when businesses choose to operate within the CBD category, they understand how to properly protect themselves. Finding a broker who is well-versed in the CBD industry can help companies better navigate the additional requirements that come with distributing CBD.

Distributing CBD: How is it Different?

Not unlike any other good sold online, CBD businesses are required to have certificates of liability and product liability insurance. However, these policies need to be CBD-specific—designed to better protect companies from the complexities of the industry and potential legal and financial pitfalls.

Working Together to Get the Right Coverage

It’s no secret that the CBD industry is only going up from here— especially with major platforms like Shopify announcing their distribution of CBD products. As a result, more companies are looking to branch out into this emerging market. But brands don’t have to do it alone—we can work together to find the best, most cost effective solution.

Looking to protect your supplement business from significant CBD industry-specific risks? Click here to start the process.


About Chris Morey

Chris Morey specializes in protecting and supporting the growth of Dietary Supplement and CBD businesses, including raw material importers, manufacturers, distributors and retailers. A Certified Sports Nutritionist, he has been active in the health and fitness industry both professionally and personally for over a decade, and he understands the challenges that businesses in this space face. Chris firmly believes that dedication and consistency lead to results, and every day he works to translate that philosophy into partnering with his clients to reach their goals.

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