Every industry faces risks. That’s the accepted consequence of trying to turn a profit.

For businesses in the cannabis industry though, many of these risks are perhaps especially pronounced due to difficulty in obtaining adequate insurance coverage.

Gray-area legality, patchwork and evolving rules and regulations, as well as the teething problems faced by any new-growth industry in the process of professionalizing are some of the reasons why it is proving so difficult.

And there’s more. Here are the seven main threats your marijuana business needs to be aware of in order to effectively manage risk and thrive.

1. Federal cannabis prohibition poses complications

Insurance requirements are common to most industries dealing in goods. They include property insurance, product liability, and workers’ compensation. However, many insurance providers are hesitant to work with state-legal cannabusinesses due to the plant’s federally illegal status.

This attitude is slowly changing, but it remains an issue marijuana business owners must navigate.

2. Secure and reliable cannabis banking remains elusive

Most of the major banks are similarly reluctant to service marijuana businesses since federal law technically considers them criminal enterprises.

This could change if Congress passes the Secure and Fair Enforcement (SAFE) Banking Act, which would ensure financial institutions can work with cannabusinesses without the threat of federal interference. So far though, the legislation remains stuck in the Senate having been approved by the House on six occasions in one form or another.

3. Mergers, acquisitions, and bankruptcy risks

More and more marijuana businesses are undergoing mergers and acquisitions. Larger cannabis companies could pose serious threats to smaller marijuana businesses that are already facing bankruptcy due to onerously high taxes and complex regulatory requirements.

What’s more, cannabusinesses that file for bankruptcy are ineligible for federal relief due to the plant’s illegality.

4. Wildfires

The West Coast is the heartland of marijuana farms in the USA. It’s also where the threat of wildfires is most severe.

The majority of cannabis crops are not insured against this risk since marijuana plants containing more than 0.3 percent THC are excluded from the federal crop insurance program.

The threat of wildfires isn’t only for marijuana growers though. Cannabis retailers and processors could also have their properties and inventory wiped out by a wildfire.

5. Theft and security threats

Most marijuana businesses operate in cash since it is difficult for them to open a bank account. This puts them at particular risk of loss and theft.

Local zoning laws for marijuana businesses often don’t help either. Many put a limit on the number of dispensaries that can operate in an area, forcing others into less safe parts of the city.

6. Talent deficit

As the cannabis industry continues to grow rapidly, the need for more workers increases. This need comes at a time when many businesses are finding it hard to attract workers amid the so-called ‘Great Resignation’.

The longer this continues, the harder it will be for cannabusinesses to meet their growth projections, while the pressure to recruit also tends to increase health and safety risks for workers.

7. Workers’ compensation

Which brings us to our final risk – workers’ compensation. Cannabis farms often deal with dangerous heavy machinery and the labor-intensive, repetitive nature of the work further increases the chances of workers’ compensation claims due to injury.

Cannabis retailers, meanwhile, have to deal with the threat of in-store robberies that put workers at serious risk.

Ready to take action on these risk? Check out our brief guide on risk management for marijuana businesses.