While some in the media tend to conflate “big cannabis” with “big tobacco”, in truth cannabis businesses around the country tend to be small businesses. Think of dispensaries as small retailers, often with the same limited financial backing as many restaurants, convenience marts or clothing boutiques.

So in these times of nationwide upheaval, a dispensary faced with broken windows, stolen merchandise, and physical damage to commercial furnishings, computers and security systems may not have the protection it expects. Dozens of dispensaries have been ransacked in cities including Los Angeles, San Francisco, Portland, Chicago and Boston.

As these entrepreneurs found, not all insurers pay for losses due to protests and civil unrest. To begin with, losses due to looting are often considered to be already wrapped into business income losses due to COVID-19. What’s more, many small business policies have an exclusion for virus-related losses, dating back from the SARS epidemic of 2003. Depending on how the insurer interprets this exclusion, there may or may not be a payout.

Are there other potential roadblocks?

Yes indeed. Dispensaries tend to be cash-only businesses, and small business policies typically exclude loss of cash. And because dispensaries are a relatively new business category, insurers may err on the low side when computing any payouts for loss of business.

What is a small cannabis-related business to do? Certainly, it all starts with receiving the right counsel on which insurance carrier to do business with. But moreover, the business must be prepared to take steps in the event of a claim that go beyond the norm. Extensively documenting all losses and damage with photographs and receipts. Immediately taking steps to shore up the property, which may include increased security. And turning to outside legal and accounting counsel if needed to establish a basis for financial claims.