The protests, and coinciding civil unrest and vandalism, that spread across the U.S. in recent weeks didn’t skip cannabis businesses. In fact, both medical and recreational adult-use cannabis dispensaries experienced looting. Some victims say the retail cannabis sector was targeted; others claim professional theft. Other retail locations suffered relatively minor physical damage (think broken windows and spray-painted graffiti). These situations have effectively shined a light on risk management concerns that are unique to the industry.

On the one hand, smaller operators are less likely to have purchased sophisticated insurance products to protect their investments. On the other hand, large multi-state operators may have spent $1 million in insurance premiums and even then may not have their claims covered by their policies. In many cases, stipulations and limits include the terms of replacing cash on hand. Hopefully, these businesses have excellent records — and the receipts to back those records up. And therein lies the problem.

In light of recent events, some cannabis businesses are diving in and reviewing their insurance coverage with a magnifying glass, asking the following questions:

  • What is our coverage for?
  • How much does it cost?
  • What exclusions apply?
  • Are our inventory count and valuation current?
  • Are our records maintained?

Canna-businesses in Boston, Philadelphia, Chicago, Denver, and across California had dispensaries looted – both for cash and stock. Cannabis insurance claims are piling up. Those smaller cannabis businesses that couldn’t afford or access extensive coverage might be left holding the bills. Many of these businesses have required security equipment on site that may have ended up damaged or stolen, in addition to computers and other electronics that are enticing for thieves.

For those cannabis businesses filing insurance claims, current and accurate recordkeeping — in addition to corresponding insurance premiums — proved essential. For example, in some states, medical dispensaries were transitioning their business model to include recreational cannabis. Unless they frequently communicated with their insurer to ensure adequate coverage based on their changing business needs, they might have had more inventory than was initially covered under their insurance policy.

The problem is exacerbated by the lack of banking services. Many of these dispensaries are primarily cash businesses by nature. Even if they stashed their cash in fire-rated vaults, they were not necessarily designed to survive the extensive break-ins that occurred. These are the types of situations that might put those more vulnerable businesses out of commission.

These current events have served to remind cannabis businesses to consider revised security scenarios and regulatory concerns combined with insurance re-evaluations. Even those major industry players — those large, multi-state operators — find they are receiving minimal insurance payouts. Even the largest companies in the industry realize that they need to take a second look at their assets, liabilities, and insurance options.