By Susan Preston and T.J. Frost
Just because Canada and a growing number of U.S. states are legalizing cannabis doesn’t mean that cannabis theft will decrease. In fact, the cannabis industry is increasingly vulnerable to theft from both inside and outside the business itself, due to the desirability of the product.
Like most industries, the cannabis industry is vulnerable to employee theft, smash-and-grab robberies at retail locations and stolen product during delivery. What is unique, however, are the challenges that cannabis businesses face in the growth, manufacture, and distribution of a product that has not been legal long. Its appeal has led to concerns over potential increases in theft of both product and revenue.
Yet despite the risks, many cannabis business operations are not adequately protected from theft. Insufficient security camera coverage, rudimentary alarm systems, or lack of proper protocols for employee access to product can all expose your cannabis operation to risks for theft.
Here are just a few of the real-world losses cannabis operations are facing:
- A grower realizes that four ounces of product have been stolen on a daily basis, for six months;
- A dispensary operator loses both cash and product when thieves break in by drilling through the neighboring business’s wall;
- A grower builds a new facility and installs alarms on the doors but thieves break in via an unprotected window and help themselves to product.
Top 4 Security Risks and Best Practices for Mitigating Cannabis Theft
The busier the operation, the more likely basic security standards are being overlooked.
Problem: Inadequate security. Camera systems or alarms cover parts of the buildings or operations, or there’s no procedure for electronically accessing certain facilities.
- Solution: Install comprehensive alarm systems that are adequate enough to cover any future expansion needs. Planning ahead can allow a business to more easily secure new operations quickly.
Problem: Missing or weak employee protocols, including failure to check employees and their bags as they enter and exit the worksite.
- Solution: Implement procedures that include check in/check out processes for each room and per shift change. Supply employees with company-issued scrubs and shoes that are worn during work hours and stored onsite. Follow required storage procedures.
Problem: Lack of employee screening prior to employment.
- Solution: Vet potential employees with background checks to help identify issues prior to hiring.
Problem: Noncompliance with basic insurance requirements, including failure to secure product at the close of each business day, or not understanding the different coverage definitions.
- Solution: Establish in-house security teams to manage compliance. Also, work with your insurance broker to assess all the company’s vulnerabilities, and put programs in place that address the unique risks in each area of the business.
Understand Insurance Coverage Limits and Exclusions
Adequate insurance coverage is just as important as having proactive risk mitigation efforts. Cannabis operations should consider a variety of insurance – crime, product, property, and crop coverage as needed. All insurance carriers differentiate clearly between business, personal property, finished stock, and growing stock in their policies so it’s important to have a broker who understands the fine print.
Further, not all policies are the same. There are different limits and exclusions that come with each policy type, and each insurance carrier has distinct definitions of what is covered. A variation in any one definition could mean you’re buying the wrong type and amounts of coverage.
HUB International’s advisors and cannabis specialists are available to assess your business for proper security and employee protocols and review your current insurance coverage to ensure it adequately meets your needs.