Do I Need General Liability Insurance For My Cannabis Business?

11 January 2023
 Categories: Insurance, Blog


According to the California Department of Tax and Fee Administration (CDTFA), cannabis sales in California have exceeded $4 billion since January 1, 2018. People can get a piece of the edible pie by opening a legal cannabis-related business themselves. Naturally, opening a cannabis-based business comes with legal requirements, such as insurance. Many business owners receive an offer that includes general liability insurance, but do you need general liability insurance for your cannabis business?

What is General Liability Insurance?

General Liability insurance covers you in the case of an accident on company grounds. For example, if a customer slips and falls inside your dispensary or cuts themselves on a garden tool at your greenhouse, the customer can sue you. General liability insurance only covers customers and only covers incidents that occur on premises. 

You pay a premium for the coverage, and you have coverage up to a specific amount, such as $500,000 or $1,000,000.

What is Covered By General Liability Insurance?

There are 3 main damages covered by general liability insurance.

  • Injury and medical expenses

General liability will cover a customer's medical care after an injury as well as follow-up care and expenses caused by the injury, such as missed work, medical equipment, and medication. 

  • Property damage 

The customer may suffer damages in the form of damage to their property. For example, a light fixture can fall and damage a customer's phone. Your insurance will cover the cost of the damage. 

  • Legal fees

A lawyer will facilitate the process after a lawsuit and negotiate the settlement in your favor without dismissing the defendant's injuries. Luckily, the coverage will pay for the legal fees. 

What Does General Liability Not Cover?

It's important to understand what isn't covered by general liability insurance on top of what is covered:

  • Injury to employees (workers' compensation insurance)
  • Injuries caused by using a product (product liability insurance)
  • Commercial property damage (commercial property insurance)
  • Work vehicle accidents (commercial auto insurance)

In order to save money, talk to your insurance adjustor if you can bundle and save when you buy multiple policies. 

Is General Liability Required?

The law doesn't require general liability insurance. However, it's highly advised. Without general liability insurance, you will need to pay for a lawsuit out of pocket. It can put you out of business. 

When you take your business seriously, you protect it with the proper insurance. When something does happen, you can operate as normal while your insurance company takes care of the details.  

Learn more about cannabis commercial general liability insurance.