Why Cannabis Operators Need Suitable Product Liability InsuranceAre you overpaying for workers’ compensation insurance? State law requires cannabis employers to carry workers’ compensation, just like employers in other industries. Unlike employers in other industries, though, cannabis employers don’t always have access to programs that may help them save money. The legal gray area remains a barrier for cannabis companies, but thanks to the Cannabis Dividend Program, it’s now possible to enjoy savings for promoting a safe work environment.
Being Safety Conscious Leads to a Great ROI
Imagine two companies manufacture marijuana edibles. Since they operate in the same state, they are regulated under the same laws. They also have approximately the same number of employees, whom they pay approximately the same wages, and their operating costs are similar.
However, Company A spends more on safety programs and worker training, whereas Company B saves money by cutting corners. Initially, it looks good for Company B – but then the worker injuries begin to add up. Company B faces numerous workers’ compensation claims, which leads the company’s insurance rates to increase. The injuries also lead to lost productivity for Company B. Morale plummets, resulting in high turnover, which increases employment costs while further reducing productivity.
Meanwhile, Company A is seeing fewer injuries than is typical for the industry. The company’s workers’ compensation rates drop. Since worker morale is high, workers are loyal and often refer their friends to apply for jobs. In addition to surging productivity, the company isn’t spending much on worker recruitment. As operating costs decrease, profits increase.
As you can see, worker safety has always been a good investment. However, now, with the Cannabis Dividend Program, there’s one more way to profit from being safety conscious.
Cannabis Companies Are Often Locked Out of Programs
As reported by CNN, Vice President Kamala Harris recently said it was “absurd” and “patently unfair” that marijuana is considered more dangerous than fentanyl under federal law. She called on the DEA to change this as quickly as possible.
Change may be coming, both in the form of a possible DEA rescheduling and the passage for the SAFER Banking Act, which would help cannabis companies access financial services. In the meantime, though, meeting insurance requirements is often an expensive hurdle. According to the American Bar Association, cannabis companies are often required to maintain multiple types of coverage, but finding insurance can be difficult. When coverage is available, it’s generally though the surplus market, which is typically expensive.
To add another layer of complication, cannabis companies are usually denied financial services. The American Bankers Association explains that, since marijuana remains illegal at the federal level, any funds that can be traced to marijuana operations may be considered money laundering. This results in significant risks for banks that take on marijuana or marijuana-related clients.
Some Options Do Exist
Workers’ compensation programs with dividends allow employers to receive a return on their premiums if they succeed in keeping their claims costs down. In other words, if there’s money left over after the insurer has used the premiums to cover expenses, the employer is eligible for a return in the form of a dividend.
Cannabis companies may assume that dividend programs aren’t available to them. Historically, that has been true. However, the Cannabis Dividend Program now brings this option to the cannabis industry.
Are You Eligible for the Cannabis Dividend Program?
The Cannabis Dividend Program is available to eligible members of the Heffernan Cannabis Association:
- Many cannabis businesses, including cultivators, processors, manufacturers, distributors, and dispensaries, starting at $5,000 in premium.
- Oil extraction operations, starting at $100,000 in premium. They are subject to a loss control inspection.
- Accounts with armed guards or security, starting at $100,000. Accounts with less than $100,000 in premium may be considered if the armed guards and security services are subcontracted with certificates of workers’ compensation insurance.
Are You a Safety-Conscious Cannabis Company?
If your cannabis company prioritizes safety, the Cannabis Dividend Program can help you control your claims with a loss control specialist, indemnity claims professionals, and a dedicated client service account manager. You’ll receive a quarterly claim review and you can request Medcor injury triage services. If you keep your claims down, you’ll also receive a dividend.
Are you interested in the Cannabis Dividend Program or the Heffernan Cannabis Association? Learn more.
