Opening a new cannabis retailer in Canada can be both an exciting and daunting task. It’s been nearly two years since it’s legalization, but in provinces like Ontario, cannabis retailers are still few and far between, but growing by the day.
If you are in the process of opening a store, you might sometimes feel a little bit isolated. For example, it’s really hard to get something as basic as a business banking account, with the majority of financial institutions unwilling to support (we’ve got a great recommendation here by the way if you need one!).
Insurance is no different. Most Canadian insurance companies are unwilling to insure businesses in the cannabis industry. There are a few reasons for this, including exclusions in their own reinsurance policies (insurance for the insurers) but also because this is a new area for the economy and insurers don’t typically like jumping into new things without plenty of study and data.
However, there’s no need to worry. We’ve got your back and have developed relationships with the small number of insurance companies who proudly support the cannabis industry.
|Next Wave||A specialist insurance provider who focusses only on the cannabis industry – from seed to sale – backed by Wynward Insurance Group, an A-Rated insurance carrier.|
|O2||One of the first specialty insurers in Canada who focusses solely on the cannabis industry – backed by Lloyds of London and other carriers.|
|SUM||A large, national Managing General Agent, offering a wide range of commercial insurance products who have become on of the country’s leading insurers of the cannabis industry.|
|Cansure||One of Canada’s largest specialty insurance providers with a wide range of property and casualty products. Cansure has developed a leading position in the cannabis industry.|
|Trinity Underwriting||A specialist insurance provider with focussed solutions for Canadian businesses. Trinity have solutions for other cannabis businesses, e.g. testing facilities.|
Each of these insurers brings their own strengths to the marketplace and have products which focus on different parts of the cannabis industry in different provinces.
As a retailer, you will need to consider the following coverages which can typically be purchased as part of a package:
In Ontario, you will need $10,000,000 of General and Product Liability coverage in order to get your OCS license?
Some insurers will offer these as part of a package and others may only be able to offer selected parts of these coverages. Your Mitchell & Whale insurance broker can help you navigate this process so you can get the coverage you need at the best price.
The answer to this question depends on how much product you expect to sell and the value of your property, fittings etc. However, as a ballpark, for an Ontario cannabis store including the minimum $10,000,000 of liability coverage, you should budget from around $8,000 a year (plus taxes).
Insurance for a cannabis shop will cost you more than for most other retailers. There are many reasons for this, from greater amount of regulations to the naturally higher risks associated with the product itself.
If you need to start your insurance significantly in advance of opening the store, e.g. you need insurance for your landlord only at this stage, then you may have the option to start your policy with reduced liability coverage and add the remainder in a few months once you have your license. This will likely reduce your price to approximately $4,000 on an annualized basis, and then increase once you start receiving cannabis and selling.
There is usually an option for you to spread this cost using a monthly payment plan.
Mitchell & Whale have trained and experienced brokers working with businesses similar to yours. We are able to gather your information, shop the market and generally help you navigate this space with ease. Give one of our brokers a call to find out more.
Want to add to this story? Let us know in comments below! Mitchell & Whale is a fast-growing insurance brokerage in Ontario, striving to make insurance _not suck_ one customer at a time. Give us a call today to discuss any of your insurance needs at 1.800.731.2228.