By Evan Stait, Hub International
Just because cannabis is now legal in Canada 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. Even in the days immediately following the legalization, there was a theft from a legal grow-op in Ontario. Cannabis is legal for medical and recreational use across the country, and 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 neighbouring 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
Having adequate insurance coverage is just as important as having proactive risk mitigation efforts. Cannabis operations should consider a variety of insurance policies – 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 or amount of coverage.
Overall, it’s important to take proactive steps to assess, prevent and respond to this common risk in order to reduce your financial and operational exposures.
Evan Stait, MA, CAIB, is a commercial account executive at global insurance brokerage Hub International. Evan and his team created one of the first high value hemp crop insurance solutions for open air, large acreage hemp cultivators. He is fascinated with the growing plant, both hemp and cannabis, and is passionate about risk management and insurance solutions for the entire vertical chain – from seed to product distribution. Evan completed his Bachelor’s and Master’s degrees at the University of Alberta and holds his Canadian Accredited Insurance Broker Designation.
