Cannabis has made big strides in its short 3 years since legalization in Canada. This journey has not come without a handful of hiccups along the way. Becoming aware of the current risks faced by the cannabis industry can help you determine where to focus your attention and how to develop the best path forward in creating a strong, viable business.
5 risks currently faced by cannabis companies:
Theft is a threat to the day-to-day operations of many retail businesses, but especially for those who own a cannabis shop. Investing in security measures including alarms, cameras and security guards can help prevent robberies from happening. It is also important to make sure your employees know what security measures your store has implemented and that they are trained on what to do in the event of a break-in. Enhanced security measures along with workplace safety training will allow your staff to feel more comfortable knowing that your store has taken the proper precautions to protect them.
Cyber criminals like to prey on newly established industries such as cannabis, e-commerce and cryptocurrency. POS software and other technology used to run your business hasn’t gone through the same years of rigorous testing and improvements as software found in other industries. This can leave your business vulnerable to cyber attacks. To prevent breaches from happening, regularly participate in cyber security training and protect your business by adding cyber insurance to your cannabis insurance package.
Many of the risks faced by cannabis companies stem from the fact that cannabis still has a negative reputation surrounding it. The relatively uncharted territory of legal cannabis has resulted in continued challenges working with Canadian banks, limitations to social media accounts and a lack of marketing freedom. These issues should start to improve when government regulations are reviewed and as more research is collected on the industry.
Product quality control
Product defects continue to be one of the top concerns for cannabis companies. Product recalls have the ability to seriously damage your reputation if handled poorly. Alternatively, if handled with care by promptly announcing a voluntary recall with a refund provided, your customers are more likely to respect your honesty and continue to trust your products.
Inadequately trained employees can hurt the safety and success of your business. Without proper training and structure, employees are more tempted to commit theft and are less prepared in the event of a robbery or break-in. They are also more likely to provide customers with a below average retail experience, which could lead to poor reviews or lost customers. Establishing proper employee training, education and security protocols will enhance your overall retail experience and brand reputation.
While some of these risks are more commonly discussed in the cannabis industry, that doesn’t mean that cannabis businesses are immune to regular insured perils such as fires, water damage, windstorms or snowstorms. These are some of the most common forms of loss that also apply to cannabis businesses, so consideration should be given to these risks.
Although Canadian cannabis has grown substantially since legalization in October 2018, the industry will continue to face growing pains in the years to come. By implementing effective safety measures and risk management techniques, you can get back to focusing on running your business.
These safety measures can also benefit your cannabis company when you are looking for insurance. Insurers will review your due diligence measures as well as the security programs in place when calculating your insurance limit. The brokers at Fuse insurance understand the Canadian cannabis marketplace and can help you to obtain the right coverage for your business, from start-up to full retail operations. If you’re interested in learning more about the insurance process for your cannabis business, contact us at 1-866-387-FUSE (3873). If you’re ready to get started on your online quote today, fill out our quick and easy form.