As we work together to continue the slow march toward cannabis legalization, and as we continue to see success all across the country, we’ll need to be prepared for an increase in the risks that come along with an increased volume of sales. Perhaps more than any other industry, given the intense political scrutiny our budding industry is under, mishaps and mistakes can cause irreversible harm to a cannabis business.
Here at White Eagle we offer a wide range of insurance products that will help you pick up the pieces and rebuild if you’re unfortunate enough to be hit by one of these incidents, but we’re not just interested in helping you rebuild when the walls fall down – we want to help you make sure they never fall down in the first place.
So, pulling from our decades of experience in the insurance industry, we’d like highlight one of the major risks you’ll be facing whether you’re just starting out in the industry or you’re an established cannabis entrepreneur.
Like any other retail business, managing and finding effective strategies to decrease in-store theft is going to be an unavoidable part of your daily operations. Robberies, break-ins, and even simple shoplifting are ubiquitous but by building a floor plan meant to make it more difficult to accomplish and making sure your employees are kept well-trained and up to date with security procedures, these are problems that won’t keep you up at night.
If you’re delivering your product directly to your customers, you’ll need to take measures to ensure the product is not stolen along the way by bad employees or criminals who might be lying in wait to stop your employee on their way to make a delivery.
Like other industries, most of the theft we see in the cannabis industry is actually employee theft. Whether it’s giving discounts they shouldn’t to themselves or their friends, skimming cash off the top when processing transactions, or making sure items they want ‘disappear’ before ever reaching your shelves, bad employees are the most common perpetrators of theft in the cannabis industry. In 2015, when Colorado’s cannabis market was at $700 Million, employee theft was responsible for a loss of $21 Million in revenue.
Colorado’s cannabis market has topped $10 Billion in sales as of 2021. If that employee theft trend kept up year after year, we’re looking at approximately $400 Million in lost revenue since the program started. That’s just revenue lost to employee theft, we’re not even accounting for every other type of theft we went over.
Reducing Theft Exposure
– Develop, implement, and train your staff in theft reduction protocols. A well-prepared staff is a crucial component to a well-rounded plan for protecting your business.
– Screen new hires every time. A criminal record of theft or fraud or issues with prior employers can be a dead giveaway. Screening lengthens the hiring process but will save you money if you do it right.
– Don’t be shy about implementing bag checks for employees when they leave the workplace. If employees know they’ll be checked, they’re far less likely to attempt to steal products.
– Hire security personnel trained in ID checking, conducting bag checks in a professional manner, and dealing with issues that might come up day to day. Visible in-store security is another road-block to thieves who might be scoping stores out for a robbery.
– Invest in the security of your business. Cameras, alarm systems, and buffer zones between the front door and the stocked shelves will make your business harder to rob, harder to steal from, and reduce incidents overall because thieves will avoid stores that aren’t easy to prey on.
– Partnering with experienced insurance professionals who can help you ensure that you’re protected if an incident does happen will save you time, money, and keep your business on track.
2. Product Tampering
Product tampering is one of the biggest risks to the cannabis industry. Not only can a tampered product put you at risk of failing to meet compliance standards in your region, it can also open you up to massive lawsuits if you’re found to be liable for harm done to customers by that tampered product. Even putting aside the health risk to customers and the risk of lawsuits, the damage done to the reputation of your business and the loss of trust in your customer base can leave your company dead in the water. As insurance professionals tasked with making sure our clients are able to rebuild after catastrophe, we know better than anyone that trust is what keeps your customers coming back.
Making sure the company manufacturing your product is doing so in a safe and reputable facility staffed by experienced professionals is critical to keeping your customers, and your business, safe from harm. When those products get to your shelves and are sold to your customers, you’re held liable if something goes wrong. Doing what you can to research manufacturing standards and then following up to make sure they’re meeting those standards consistently is step one.
In Store Tampering
If the products on your shelves aren’t properly protected, anyone from a rival store owner to an angry employee can potentially tamper with the product. Keeping your products secure from the moment they enter your store to the moment your customer takes them home is extremely important.
3. Keeping up with Regulations
Maintaining your compliance with shifting regulations on the industry is the most important part of running your business. We’ve seen businesses snuffed out over night after hundreds of thousands of dollars in investment because they missed a step, were found to be non-compliant, and lost their license to do business. Dedicate yourself to making sure you’re up to date with regulations, partner with other industry professionals who can share strategies with you, and keep your employees accountable to upholding those standards.
The cannabis industry is growing at a rapid pace across the globe. In 2020, in the midst of the COVID pandemic, global legal sales of cannabis increased nearly 50% over 2019 and the trend only seems to be increasing as more states legalize and open their markets for recreational sales. This is exciting for sure, but it’s important to keep in mind that all the money-making potential in the industry also carries with it the potential for disaster if you don’t develop and implement a plan for making sure your business grows and grows responsibly.
Why White Eagle
We’re experienced professionals with deep knowledge of the cannabis industry who can help you build a well-rounded risk mitigation plan to keep your business safe. But we’re not just another insurance company – Through our White Eagle Coalition, we’ve partnered with a nationwide army of cannabis growers, wholesalers, retailers, and lobbyists united to challenge the status quo. We’re working together to decriminalize and legalize cannabis, open new markets, adapt old insurance technology, build new technology from the ground up, and fully achieve the vision of a de-stigmatized cannabis industry. We’re here for the long haul. Join us.