Cannabis Business Insurance
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Product liability insurance for cannabis businesses

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Product liability insurance

Product liability insurance can help cover your legal expenses if someone claims that a product you sold, made, or distributed caused an injury or property damage.

How does product liability protect against customer lawsuits?

Your products are the most risky aspect of running a cannabis business. A customer could suffer an allergic reaction or other adverse effect to CBD or marijuana. Someone could even blame their harmful behavior on a high dose of THC from a marijuana edible or other product.

A product lawsuit could financially devastate your small business. That's why product liability insurance is crucial for businesses that grow, sell, or distribute marijuana and other cannabis products. This policy helps cover legal expenses when your product is blamed for:

  • Bodily injuries
  • Adverse reactions
  • Financial loss
  • Property damage
  • Wrongful death
Find product liability insurance quotes from top U.S. providers

What coverage can product liability insurance provide for cannabis businesses?

If a customer blames your product for property damage, financial loss, or an injury, they could file a lawsuit. Any business in the distribution chain is vulnerable to these lawsuits. Product liability insurance helps pay for legal defense costs, court-ordered judgments, and settlements related to your products.

Bodily injuries

If a customer trips and breaks an arm after using your product, they could file a lawsuit against your business.

Product liability insurance would help cover any damages, including medical bills from an injury and the cost of hiring an attorney.

Adverse reactions

If a customer ingests edibles with a high amount of THC, they might experience a panic attack, dizziness, or other adverse reaction. Additionally, marijuana contaminated by mold or pesticides could cause severe illness.

Product liability coverage protects against legal fees and medical costs when a customer sues over a bad reaction or illness caused by your product.

Financial loss

Financial losses related to your product are also covered by product liability insurance. For example, if a customer is arrested for driving under the influence after using a product that was more potent than advertised, your business could be held responsible for fines and legal costs.

Property damage

If a customer blames your product for damaged or destroyed property, they could hold your business accountable for the cost of repair or replacement, or sue for damages.

For example, a defective battery in an e-cigarette could start a fire that damages a customer's home. Product liability insurance would cover your business's legal defense costs, along with any judgment or settlement.

Wrongful death

Without federal oversight, untested and mislabeled products are a big risk in the cannabis industry. For example, a CBD product that contains THC – but does not report it on the label – could cause hospitalization or even death.

Product liability insurance protects your business against wrongful death claims from overdoses due to mislabeled products, lung injuries from vaping, and other risks.

Other important policies for cannabis businesses

Product liability insurance covers some of the cannabis industry's biggest risks, but it doesn't provide complete protection. Owners of small cannabis businesses should also consider:

General liability insurance protects against the most common business risks, such as customer slip-and-fall injuries. Most states require this coverage for cannabis businesses.

Commercial property insurance helps businesses recover financially from fires, theft, vandalism, and other business property damage or loss.

Commercial auto insurance covers the legal costs and property damage from accidents involving your cannabis business's vehicle. It also covers vehicle theft and vandalism.

Workers' compensation insurance is required in most states for cannabis businesses with employees. Workers' comp also protects sole proprietors from work injury costs that personal health insurance might deny.

Surety bonds guarantee your cannabis business will fulfill the terms of its contracts and pay its suppliers. Many states require a surety bond as part of licensing requirements.

Get free quotes and buy online with Insureon

Are you ready to safeguard your cannabis business with product liability insurance? If you run a dispensary, you can complete Insureon’s easy online application to get quotes from top U.S. carriers. For other cannabis businesses, you can call our dedicated agent at (872) 260-5150 to get insurance quotes for your business.

Once you find a policy that fits your needs, you can begin coverage in less than 24 hours.

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Updated: February 17, 2023
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