Cannabis dispensary insurance in California
What insurance coverage is required in California for cannabis dispensaries?
In California, cannabis businesses are regulated by the Department of Cannabis Control (DCC).
The DCC requires cannabis distributors to carry a general liability insurance policy with a $1 million per-occurrence limit and a $2 million aggregate limit. All cannabis businesses must have a $5,000 surety bond for each business location.
General liability insurance covers the most common risks of owning a small business, such as lawsuits from customers who suffer an injury or property damage at your shop. Surety bonds provide reimbursement if your business fails to adhere to the terms of a contract. However, they’re not the only coverage you need.
To comply with California law, businesses need to carry workers’ compensation insurance if you have employees. And, if you have any business-owned vehicles, state law requires that you carry commercial auto insurance.
Keep in mind that although California has approved cannabis for medical and recreational use, the majority of cities and counties in the state do not allow cannabis businesses of any type. For example, dispensaries are permitted in Los Angeles, San Diego, and San Jose, but they are prohibited in Anaheim and Fremont.
In some places, there are also limits on the number of cannabis businesses that can get a license. In short, you’ll need to research your state, county, and city laws to make sure your dispensary or other cannabis business is obeying the rules.
What other types of business insurance do I need for my cannabis dispensary?
While general liability insurance and surety bonds are both vital to running a dispensary in California, they are not the only coverage you need. Dispensary owners should also consider the following policies:
- Product liability insurance covers legal costs if a customer sues over harm caused by a product sold at your dispensary, such as an adverse reaction to an edible. It’s often included in general liability insurance.
- Commercial property insurance helps pay for lost, damaged, or destroyed business property. For example, it can cover the cost of replacing stolen inventory or renovating a marijuana dispensary’s building after a fire.
- Property policies sometimes include business interruption insurance, which covers costs when a fire or other covered property claim forces your business to close temporarily.
- Additionally, you may need inland marine insurance to protect property in transit or stored off-site, as property insurance only covers items at your business location.
While these are a top priority for cannabis sellers, they aren’t the only policies you need to run a business. You can start an application and get personalized insurance quotes for your business to find all the policies you need.
How much does cannabis business insurance cost?
A small dispensary with only a few employees can expect to pay less for commercial insurance than a larger business.
Factors that can affect cannabis business insurance costs include:
- Type of business
- Value of your business property, equipment, and inventory
- Business revenue
- Location
- Number of employees
- Policy limits and deductibles
- Claims history
What are the laws and requirements for cannabis businesses in California?
While California has permissive laws for cannabis use, it’s also one of the most heavily regulated states in the nation. Beyond insurance and bonds, there are several other requirements for running a cannabis store in California.
Perhaps most important, you need a license from the DCC to operate a dispensary or other cannabis business. To keep that license, you need to follow the DCC’s rules about selling, storing, and transporting cannabis.
For example, California requires cannabis businesses to:
- Implement specific security measures
- Advertise, label, and package items in accordance with regulations
- Have a distributor license for drivers
- Enter information about deliveries into a database
- Adhere to California cannabis testing regulations
- Pay state and local cannabis taxes
Make sure to read the full list of California’s requirements to be sure you’re in compliance with the complete list of laws and regulations for California.
How can I get business insurance for my California dispensary?
If you run a dispensary, you can complete Insureon’s easy online application to get quotes from top U.S. carriers. Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.
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