In an era marked by escalating risks across various industries, the specter of rampant security claims looms large. These claims wield the power to wreak havoc on businesses, rendering them financially vulnerable and tarnishing their hard-earned reputation. This peril is particularly pronounced within the burgeoning cannabis sector, which grapples with a unique set of challenges and legal intricacies. Amidst this backdrop, we’ve observed a significant trend: a growing number of cannabis companies are bolstering their defense by employing in-house legal experts and risk management professionals. Embracing this trend, Liberty’s National Cannabis Practice stands at the vanguard, offering bespoke risk management services to our clients. In this article, we’ll delve deep into the realm of anticipatory security claims in the cannabis industry and lay out a series of proactive strategies designed to quell these risks effectively.
Understanding Security Claims in the Cannabis Industry:
Large theft claims can become public safety concerns and materialize when operators and landlords fail to provide adequate security measures. The repercussions are manifold, encompassing financial losses, protracted legal battles, and potentially irrevocable harm to a business’s standing. However, the complexity of the cannabis industry compounds this issue. Even companies who are fully secured with state-of-the-art fortification are targeted by thieves as this is what comes with being in the cannabis sector. With its high-value commodities, cash transactions, and valuable equipment, the stakes are raised even higher. Property owners and cannabis operators would be wise to anticipate these “worst case scenario” criminal activities and take necessary precautions to thwart them, underscoring the need for proactive risk management strategies.
The Impact of Foreseeable Security Claims
A pivotal facet of insurance underwriting involves crime scores, which gauge the risk associated with specific locations. In the realm of cannabis-related enterprises, higher crime scores can significantly impact coverage and premiums. Here at Liberty, our approach is multifaceted. We meticulously assess a range of factors including security protocols, product display practices, and local crime trends. For instance, in regions with a history of elevated claims, our recommendations encompass a comprehensive security assessment, augmented training programs, installation of cutting-edge CCTV systems, and collaboration with central monitoring stations.
Factors Contributing to Potential Security Claims in the Cannabis Industry:
The peculiar dynamics of the cannabis industry amplify the susceptibility to inherent security claims. The prevalence of cash transactions, the presence of valuable products, and the existence of high-value equipment all conspire to heighten vulnerability. However, these very factors underscore the need for bespoke risk management strategies that directly address these nuances.
Proactive Measures for Mitigation:
- Comprehensive Security Measures:
In the context of the cannabis industry, a one-size-fits-all security approach falls short. Robust security measures tailored to this sector are imperative, encompassing not only security personnel but also cutting-edge surveillance systems, stringent access controls, and state-of-the-art alarm systems. Regular upkeep and diligent monitoring are pivotal to deter potential criminal activity.
- Clear and Conspicuous Warnings:
The strategic placement of conspicuous warning signs in vulnerable areas is an elemental yet highly effective deterrent. Augmented by well-placed lighting and legible signage, this strategy exerts a potent influence in discouraging criminal behavior.
- Written Safety Programs and Employee Training:
Implementing comprehensive written safety programs and conducting regular employee training are vital components of proactive risk management. These programs instill a culture of security awareness and empower employees to play an active role in preventing security breaches.
- Risk Transfer for Vendors and 3rd Party Security Companies:
As the cannabis industry relies heavily on vendors and third-party security companies, it’s crucial to scrutinize their security practices. Contract reviews, thorough vetting, and verification of security protocols are essential steps in ensuring that your partners are aligned with your risk management goals. If vendors employ armed guards, their training and compliance with local regulations should also be thoroughly assessed.
- Prompt Incident Response:
Swift documentation and immediate response to crime reports occurring within cannabis premises are indispensable. The conduct of thorough investigations, coupled with well-considered actions, showcases a proactive stance towards security and bolsters overall risk management.
- Adequate Insurance Coverage:
The evolving landscape of the cannabis industry necessitates a corresponding evolution in insurance coverage. Collaborating closely with underwriters is paramount to ensure that coverage aligns with the shifting landscape, addressing potential financial risks in a dynamic manner.
Overall, the endeavor to mitigate the specter of rampant security claims within the cannabis industry mandates a holistic and proactive approach. Through an astute understanding of the industry’s unique attributes, the institution of bespoke security measures, a prompt response mechanism, and a progressive approach to insurance coverage, businesses can profoundly curtail their exposure to the ramifications of these claims.
At Liberty, our commitment to the cannabis insurance and risk management sphere positions us to empower clients with the tools and insights needed to navigate these challenges deftly and confidently.
For more information, please reach out to Valerie Taylor, Vice President (National Cannabis Practice Leader), The Liberty Company Insurance Brokers and Joe Fisco, SVP, Director of Risk Management, West Coast, The Liberty Company Insurance Brokers.