The growth in cannabis businesses in the United States over the last decade has been unprecedented. As of July 2021, marijuana is legal in 18 US states, and medical marijuana is legal in the majority of US states. However, cannabis remains illegal under federal law, meaning that companies in the industry face unique cannabis business risks. Understanding the risks and carrying proper insurance is thus a necessity for financial success.
What Are Some Typical Cannabis Business Risks?
Because marijuana remains federally illegal, cannabis businesses exist in a legal grey area. Risks relevant to this status, and other distinct risks, include:
- Difficulty securing funding due to federal controlled status of marijuana
- Problems legally processing payments, also due to federal controlled status
- General legal risks due to differences between state and federal laws
- Negative media portrayals of cannabis businesses
- Lack of employees, in some regions
- Weather and climate risks similar to other agricultural businesses
While a cannabis business can be highly lucrative in today’s climate, thoroughly understanding cannabis business risks is absolutely essential for success. Cannabis businesses require unique planning that takes into account the industry’s particular legal status at this time.
As one component of effective business planning, understanding insurance needs and the ways in which insurance can protect your business is essential for success in the cannabis industry.