Canadian licensed producers are sitting on overflowing inventories of unsold cannabis products. Since legalization, license holders have only sold 20% of their production, with the majority of cannabis products being stored in inventory or destroyed.
A certain amount of annual crop loss is to be expected due to poor weather, plant disease, crop failure or insect infestation, but the current inventory levels suggest that LPs are out of touch with product demand in the Canadian market.
Month-to-month variations in inventory levels are acceptable due to ‘Croptober’ harvests and changes in market demand. Properly stored cannabis can last from a few months to over a year if it is stored at the right temperature, humidity and lighting.
Take the time to calculate and monitor your inventory levels throughout the year and ask yourself these questions:
- In what months is your inventory the highest?
- What is the maximum amount of stock you have on your property at any given time?
- When does your inventory drop off?
- What are your stock and inventory insurance limits?
- Do you have a standard operating procedure for inventory audits?
- Do you make sure to include additional items in your stock audits like excise stamps and packaging materials?
This information will really help your insurance broker accurately determine how much coverage you need in order to be properly protected year-round. This will also help you recognize your cannabis inventory insurance limits so you can watch that you don’t exceed them and determine when you should increase or decrease your coverage.
When you are calculating the value of your cannabis stock, keep in mind that fluctuations in wholesale and retail values will affect your stock values. Paying attention to this is important to ensure that your insurance limits are correct.
At Fuse Insurance, we understand that the Canadian cannabis market is constantly changing. We take a proactive approach to your insurance and like to update your policy to reflect where your business is at to make sure you always have the correct coverage in place.
To get started on an insurance quote for your business today, fill out our online application form. If you have any questions, reach out to us over the phone at 1-866-387-FUSE (3873).