How Agents Can Help Cannabis Operators Mitigate Risks
By Norman Ives
Once called the “Green Rush,” cannabis business has slowed, facing differing state and local regulations and tax structures. While technically categorized as retail businesses, cannabis dispensaries aren’t your typical storefront.
Dispensary owners operate on the margins in nearly every part of their business—and insurance for these operations is no different. For agents adding dispensaries to their client base, understanding the industry’s nuances is essential.
Here are three distinctions to consider:
1) Additional expenses. The increased costs cannabis businesses may be charged for simply being in the business—known as the “green surcharge.”
2) Regulation. Under federal law, cannabis remains classified as a Schedule I substance. However, dispensaries are regulated by states and municipalities. Most laws prohibit outlets within 500 feet of places where children congregate, such as schools, daycares and parks. This pushes many dispensaries into urban areas that typically offer less police coverage and higher liability risks.
3) Claims drivers. Assault and battery can be a loss driver for dispensaries in troubled areas, with some experiencing between 2 to 4 claims per year. For example, disputes regarding invalid IDs can erupt at the entrance to a dispensary. If these incidents aren’t handled properly, a scuffle between the customer and an employee can break out, leading to a costly claim.
The geographic limitations of cannabis dispensaries can also result in premises liability, another claims driver. In most regions, only a few real estate investors will rent commercial spaces to green entrepreneurs, and those investors have considerable leverage in lease negotiations.
Some dispensary operators pay up to three times the market rate to secure retail space. In other cases, landlords will transfer property maintenance responsibilities to the lessee. This is especially true in the Northeast, where some insurers exclude snow removal and other winter-weather risks.
When this happens, cannabis operators have a choice: either handle snow removal and other maintenance themselves, hire a third-party to do the work, or ignore it and run the risk of trip-and-fall claims.
The problem with the latter is that, due to the nature of their business, cannabis operators seldom gain much sympathy from jurors. For this reason, legal representation often coaches operators to settle early.
How to Keep Cannabis Operators Insured
Financial pressures can prevent some dispensary operators from being fully insured. That means operators may choose lower-cost insurance. But aggressive pricing can mask material coverage gaps.
Agents should partner with an experienced wholesale broker who knows and understands the space, keeping these considerations in mind:
Understand the market. The cannabis market enters 2026 in a position of relative stability. Ample capacity and competition are placing downward pressure on renewal pricing. Agents should prioritize coverage quality over rate savings, particularly as some new entrants rely on narrow reinsurance or impose restrictive exclusions.
Know the common exclusions. Review current policies with operators and look for potential gaps. Some policies exclude assault and battery or third-party security coverage. Others exclude product liability for respiratory conditions, which can be especially problematic for anyone selling a smoking product. Explain to operators why these exclusions may increase their risk exposure.
Understand the value of third-party security firms. Statistics show that hiring security officers reduces the number of assault and battery claims. People react differently when they see a uniformed guard at the door. Officers trained in de-escalation can also recognize dangerous situations and defuse them before they lead to conflict.
Recommend trip-and-fall prevention strategies. Encourage operators to keep their properties clean and well-lit. Place wet floor signs in visible locations when needed. Dispensaries in cold-weather areas may also want to consider hiring a snow removal company to help limit liability risk.
Look for emerging risk classes. Agents should work with their wholesale partner to educate insureds on any added exposure and verify policy language to help safeguard against undisclosed limitations.
Norman Ives is the cannabis practice leader for Amwins, the nation’s largest wholesale insurance broker.
