Between the emergence of the cannabis industry and its highly regulated and well-funded environment, operators in the industry face a tremendous array of business risks. But while these risks are real, concerns can be allayed with the help of risk-management professionals like Nine Point Strategies, an agency that provides business insurance and cannabis-related recruitment consulting.
Ganjapreneur recently interviewed Nine Point’s program director, Jesse Parenti, and executive producer, Kirk Miller, about the insurance needs of cannabis operators and the company’s approach to recruiting across the many different types of businesses in the industry, including cultivation, retail and testing labs, among others. This question-and-answer interview also covers the different types of insurance available to cannabis operators, the most overlooked risks in the industry, advice for entrepreneurs on how to mitigate risk, and more!
Scroll down to read the full interview.
Ganjapreneur: As a recruiter, do you use a one-size-fits-all method for each company, or do you adapt your way of working to the client’s company culture? Why?
Jesse Parenti: While there are similarities between license types, we tailor our approach to the needs, level of complexity and footprint of the client. For example, the larger vertical operators will have different needs than a small cultivator.
Can you explain the difference between basic and supplemental insurance options in terms of coverage, cost and rating?
Kirk Miller: By basic you mean underlying limits as opposed to excess limits. You must first have the underlying coverage in order to purchase an excess. For example, an operator may have general liability limits of 1M per event and 2M aggregated, then they can purchase 1M up to 5M deductibles in excess of the underlying coverage.
Does an owner/operator take more risks in one sector of the industry than another? Which sectors need more risk assessments and why?
Jesse Parenti: All sectors have their risks, for example outdoor cultivators have wildfires while retail stores have robberies. Supply and distribution should be concerned about their auto exposure as an accident can cause a extinguishing event. These operators who have a strong culture that supports both safety and accountability, creating a safe workplace and reducing risk within their organization.
What are some of the most overlooked risks in the cannabis industry?
Kirk Miller: Directors & Officers (D&O), Employment Practices Liability (EPL), Cyber, Excess Auto. Most private companies don’t buy these lines because of the cost, perceived exposure, and perceived value. This is slowly changing as the market matures and more sophisticated operators enter the industry. As claims evolve and the industry gains insight into the risks and exposures, operators need to expand coverages to further protect their assets.
Why is it difficult for cannabis companies to find business insurance? How does this increase risk for these companies?
Jesse Parenti: Commercial insurance in general can be complicated, and for cannabis operations, carrier options are limited and coverage can be restrictive. Because of this, companies need to work with risk advisors who specialize in the cannabis industry. It is important for businesses to choose their broker rather than buy their coverage. In the cannabis space, it’s crucial to work with a risk advisor who understands your unique risks and the carrier’s coverage forms.
When is the optimal time for a company to hire a dedicated risk management team like Nine Point Strategies?
Kirk Miller: We want to get in touch with our customers as early as possible. Having been in the industry for over a decade, our advice and insights help the operator make better business decisions. It also helps with forecasting as we usually start with the basics like Bonds, GL, Work Comp and Auto. As the business grows and matures, we expand coverages to meet their needs, which can include property, freight and employee benefits, as well as D&O, EPLI, cyber and deductible liability.
What are the advantages of hiring a recruitment consultant for an already established brand?
Jesse Parenti: Working with a recruitment consultant offers a second opinion from an expert who can be supportive and deliberative. Many small and medium-sized companies do not have their own HR manager. Hiring a recruitment consultant is a great way to bridge the knowledge gap, reduce the burden of hiring and onboarding new employees, while ensuring the company is compliant with labor laws and regulations.
How have you kept up to date with OSHA and safety regulations in order to best advise your customers?
Kirk Miller: Currently, California is the only state that requires licensed operators to complete CAL-OSHA30 training. The law requires that one manager and one employee complete CAL-OSHA30 training every four years for each cannabis license.
Do you need to be knowledgeable about every sector of the cannabis industry to properly consult with them? What influences your expertise in the individual sectors?
Jesse Parenti: Nine Point Strategies has been protecting the cannabis industry for over a decade. There isn’t much we haven’t seen or experienced. This is why it is important for operators to work with a trusted risk advisor who understands your risks and has extensive claims experience.
What is the top risk reduction advice in the cannabis space?
Jesse Parenti: Hiring the right people can make or break your business. Build a strong culture, reinforced with safety and accountability. Work with knowledgeable industry experts, consultants and consultants.
Thanks Jesse and Kirk for answering these questions! Readers can visit NinePointStrategies.com for more information.