Home > Employee Benefits, Property & Casualty > Risk management, commercial insurance and employee benefits considerations for medical marijuana start-ups

Risk management, commercial insurance and employee benefits considerations for medical marijuana start-ups

medmarSay that growing and distributing cannabis for medical treatment is your business. You are a classic entrepreneur – quite possibly personally funded. You are accustomed to quickly evaluating business opportunities and you are prepared to move swiftly when the occasion warrants. You have carefully selected a corps of legal and financial advisors to compliment your high energy. They understand your business and your objectives and are able to perform proper due diligence without delay when you come upon a compelling new deal. They also allow you to move quickly, enhancing the likelihood that any new venture will be worthwhile.

Legal and financial issues immediately garner your attention; however, two oft-forgotten components in this arena are risk management and human resources. Unfortunately, inattention to these areas can potentially and without warning end an investment before it begins.

This is the backdrop for those U.S. businesses, especially start-up companies, entering the relatively new world of medical marijuana in states that have legalized the drug thus far. Funding is only the first of many challenges an organization will face upon entering the market. Other hurdles like regulation, licensing, community acceptance and security are likely to surface, pushing critical issues like risk management, commercial insurance, and employee benefits to the bottom of the priorities list. Luckily, a modest amount of planning and time spent with a trusted advisor that understands your business can help resolve issues and remove impediments before they arise. You know your business is unique, and your plan of execution should be too. Medical Marijuana start-up groups should consider the following issues as they prepare to launch:

  • Immediate coverage for a newly purchased or leased facilities
  • Statutory insurance programs
  • Varying Definition of employees
  • Protection for outside investors
  • Liability for Directors
  • Contract reviews for compliance
  • Not being under-Insured
  • Not being over-Insured

Your advisory team should also include professional risk management advisors who will:

  •  Understand your business segment, its exposures, its changes and evolutions over time, as well as the associated risks and potential solutions to mitigate and/or transfer risk.
  •  Perform proactive due diligence to help you understand and plan for risk management, commercial insurance, and  employee benefits as you grow and evolve. They should be on hand to guide you from each step, from initial funding for the company to continued growth and successful business operations.
  •  Understand the myriad of risks you face and develop a strategic risk-mitigation strategy.
  •  Know your business and specialize in your market segment
  • Advocate for you in the event of a claim, especially if the claim is product related or falls under management liability.

Amidst an evolving atmosphere of acceptance and legalization, the Medical Marijuana market continues to grow and develop into an innovative and profitable market. At the same time, the risks associated with this new business sector continue to increase. As an industry entrepreneur, it’s critical for you to seek out professionals who are invested in your success and equipped with the necessary expertise to guide you through future challenges.


About the Author

Rick Black is a Senior Vice President at WGA with a focus on Property and Casualty Insurance. He joined WGA in 2007, bringing with him 30 years of insurance experience in all areas of complex risk and risk financing. 

617.646.0279 | Rick.Black@wgains.com | Connect with Rick on LinkedIn

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