The cannabis industry is a very broad industry, and in the business of doing it all, there are a variety of codes, classifications, and considerations along the way. In order to get the right workers’ compensation coverage, it’s critical to figure out your main class code and how that relates to getting the coverage that you need. Workers’ comp is required for your business to:
Protect your employees
Protect your business
Comply with state laws
Avoid fines and lawsuits
Common injuries in this industry could include everything from slips and falls to exposure to pesticides and toxins, and even risks associated with water and electricity mixing in cultivation facilities and on cannabis farms.
The good news is that as more states legalize recreational cannabis use, the available insurance solutions and financial services are starting to expand and offer something for just about everyone.
So, does workers’ compensation insurance function the same in the cannabis industry as in others? Absolutely. Understanding the guidelines, laws, and classification codes is essential to protecting your marijuana business. No matter what state you live in, you will need to read up on how to comply with the latest workers’ comp laws and make sure that you have the right coverage.
Workers’ compensation for cannabis industry employees is the same as it is for other industries. This coverage provides medical and wage benefits to people who become ill or get injured on the job. Workers’ compensation insurance is mandated at the state level, so cannabis companies will want to make sure they follow the laws outlined in their state regarding coverage.
Cannabis workers’ compensation provides nearly endless coverage for medical expenses. It also provides compensation for lost wages if someone cannot work due to an injury or illness that’s part of a workers’ comp claim. One of the best things that you can do is to work with a dedicated cannabis insurance company that understands the unique demands of this industry.
There are several businesses involved in the cannabis production and sale journey. These include farms and cultivation facilities, processing plants, retail and wholesale dispensaries, and so much more. Every business has a role and needs to play its part accordingly. That starts with making sure that you have the right cannabis insurance.
The coverage needed will vary from one business to the next. For example, what’s included in CBD business insurance will be a bit different than those who seek out recreational cannabis dispensary insurance. The most common business types listed in this industry include:
Manufacturing and processing
Construction (to build new cannabis operations)
Technology (for POS, processing, etc.)
The last four on the list are more ancillary than directly related to cannabis processing, but they are relevant because they involve working in the industry. Those who are looking to specialize in a field with a lot of potential can come to the cannabis space and find seemingly limitless room for growth.
Of course, because of all these different types of operations, there is any number of potential workers’ comp claims that you could face:
Slips and falls
Equipment or machine injuries
Burns and cooking injuries
Repetitive motion injuries
Mold, pesticide, and other exposures
Shock risk (water and electricity)
Understanding and assessing your risks is the first step to making sure that you get the right insurance for your business. With an increasing number of cannabis insurance companies to choose from, that shouldn’t be too difficult.
In workers’ compensation law, class codes are created to help categorize businesses for easy labeling and insurance processing. These are usually four-digit codes that are issued by the National Council on Compensation Insurance (NCCI). In order to ensure that your cannabis business is properly protected, you’ll need to choose the right code(s).
The ones pertaining to the cannabis industry are listed below:
What’s more important than the classifications, of course, are the exceptions and clarifications. Often, people misclassify their business because they don’t realize that the details of the codes have so many particulars.
In most cases, a standard marijuana retail store will be classified under the retail code listed above. In some states, however, where it’s listed as a “dispensing pharmacy,” it may be classified as code 8017 instead. This is an important distinction in the cannabis industry.
On that same note, some cannabis processors often choose code 4611, which is the code for mixing compounds to make medicine. However, when CBD and THC are involved, they’re always classified under the 4825 code.
Gummies, oils, concentrates, and all other edibles fall under this classification.
The classification for doctor’s offices that dispense is listed above. However, it’s important to note that in states where medical marijuana is legal, a “prescribing provider” is considered a regular doctor’s office and will need to be classified accordingly. It’s the difference between whether the doctor dispenses or merely writes recommendations for cannabis patients.
For operations that need to deliver (outside of farms coded 0035), there needs to be a classification for drivers. This is code 7380, which can be used for drivers that are delivering between dispensaries and other facilities, or doing any delivery work related to the cannabis business. Code 0927 also includes drivers, but delivery to patient homes is not a desired choice in the eyes of insurance.
This one is less about classification codes and more about how you set up your business. If you are going to have armed security in your cannabis facility, whether it’s a dispensary, a cultivation facility, or even a grow operation, they will need to be subcontracted. Marijuana businesses that employ armed staff directly may struggle to find insurance coverage.
These are just a few of the exceptions and classification issues that usually arise. It’s best to familiarize yourself with all aspects of the insurance laws in your state so that you don’t leave your business vulnerable. Another option is to work with a dedicated cannabis insurance company that can help you get the coverage that you need.
The biggest hurdle for any business that is buying insurance comes in doing so without breaking the budget. Fortunately, there are some tips to ensure that your cannabis business is properly insured and that you get the best rates on coverage.
Insuring your cannabis business is essential to safe, legal operation within your state. You can usually get certificates of insurance a lot quicker than you think, so even if you waited until the last minute, it’s not too late.
With your new understanding of cannabis insurance, and especially workers’ compensation for the cannabis industry, it’s time for you to find your new insurance provider. The market is still rather limited, but there are companies that have the experience and knowledge that you need.
Look for a team of people who will review your application and take it through the underwriting process. Online tools and AI quote generators don’t deliver the level of personalized service you need with this insurance. Choose a provider that understands the intricate and unique nature of the cannabis industry and that knows how to provide the ideal insurance solutions.
Skip the fly-by-night companies and find insurers who understand cannabis and its unique insurance needs.
Protecting your workers is essential to the successful and safe operation of your business. Although the cannabis industry is newer, it isn’t exempt from insurance requirements, including workers’ compensation for cannabis. Make sure that you understand this coverage, including what kind and how much you need to have, and that you have a trusted insurance partner on your side to help you along the way.
When you work with Kickstand Insurance, you’ll get access to a team of experts who can review your insurance quote, help you determine what type of coverage you need, and make sure that you’re protected from lawsuits and other potential risks that come from being uninsured or underinsured. We’ll even help you find discounts and savings so that you can cover all your employees without breaking the bank. Contact us now to learn more.
Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.
Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.