Cannabis workers’ compensation insurance provides coverage for medical expenses and lost wages to employees who are injured or become ill while working in the cannabis industry.
Workers’ compensation coverage paid out $60 billion in benefits in 2021 alone. Increasing medical costs and rising employee wages have made workers’ comp policies more important than ever.
As a cannabis business owner, understanding how cannabis workers’ compensation insurance works will help you comply with legal requirements while also protecting your staff.
BZKey Takeaways
- Cannabis workers’ compensation insurance covers medical expenses and lost wages for injured employees.
- This coverage is critical for legal compliance and protecting your business from costly claims.
- Different policies offer varying degrees of coverage, so comparing multiple options is important.
How Does Workers’ Comp Insurance for Cannabis Work?
Workers’ comp for cannabis businesses operates similarly to traditional workers’ comp policies. It provides financial assistance to employees who get hurt at work or suffer an illness as a direct result of their activities in the workplace.
For instance, if someone gets hurt while trimming plants or during production, your workers’ comp coverage would cover their medical bills and a portion of their lost wages.
Let’s say that John, a budtender at your dispensary, slips and falls while restocking shelves. He sustains a back injury that requires time off work and medical treatment.
Your workers’ comp policy would cover his medical expenses and provide compensation for the wages he loses. Most policies compensate workers for two-thirds of their normal wage.
What Does a Workers’ Comp Insurance Policy Cover?
Workers’ comp insurance covers the various expenses and losses a person will incur when hurt. Some of the costs that are typically covered include:
- Medical expenses: Includes the cost of immediate treatment, ongoing care, and rehab.
- Lost wages: Pays a portion of the hurt party’s lost wages.
- Disability benefits: Provides financial support for people who suffer long-term disability.
- Vocational rehab: Will cover rehab costs if someone needs treatment to return to work.
- Death benefits: Provides financial support to the deceased person’s dependents.
- Legal costs: Covers legal fees if the injured party sues your business.
Your policy may also cover mental health services, physical therapy and emergency room visits associated with the incident.
What Are the Exclusions?
An exclusion is anything a policy doesn’t cover. Some common workers’ comp coverage exclusions include:
- Intentional injuries: Any self-inflicted or intentional injuries aren’t covered.
- Off-duty incidents: Workers’ comp insurance won’t apply to incidents that occur while someone is not on the job.
- Substance abuse: If a person was under the influence of drugs or alcohol, their claim may be denied.
- Violations of company policy: Egregious violations of safety regulations may result in claim denial.
- Non-work-related illnesses: If a person contracts an illness outside of work, it’s not covered.
Your employees must follow the rules while they are on the clock. Ensure everyone receives proper safety training to reduce the risk of a claim and help maximize the protection offered by your workers’ compensation policy.
Do You Need Workers’ Comp Insurance for Your Cannabis Business?
Yes, you need workers’ comp coverage for your cannabis business. Forty-nine states require workers’ comp insurance, with Texas being the only exception.
A workers’ comp policy protects your business from the significant financial risks associated with employee injuries or deaths. You could also face fines for violating state law (unless you operate in Texas).
How Much Does a Cannabis Workers’ Comp Policy Cost?
Businesses pay about $1 per $100 in payroll for workers’ comp coverage. Small businesses spend an average of just $542 annually for workers’ comp protection.
Let’s say you have $100,000 in annual payroll. Based on these figures, you could expect to pay about $1,000 in workers’ comp premiums.
Your costs could be higher if you have a larger payroll or work in a more dangerous field. Insurers use a standardized formula to calculate your exact rate. That formula is as follows:
Classification rate X experience modification rate X payroll/100 = premium
How to Get Cannabis Workers’ Comp Insurance
There are three primary approaches to buying workers’ comp insurance for cannabis businesses:
- NCCI: The National Council on Compensation Insurance administers workers’ comp rates and policies in many states, ensuring standardization.
- Monopolistic: Some jurisdictions have state-run programs, the only option for obtaining coverage in those states.
- Independent: If you don’t live in a state with monopolistic programs, you can work with independent carriers.
You can seek protection from one of the biggest insurance companies or partner with a carrier that specializes in policies for cannabis businesses. These independent providers can offer more flexibility regarding coverage and policy scope.
Compare the Best Workers’ Compensation Insurance Providers for Cannabis Businesses
Check out which companies offer the best cannabis workers’ compensation insurance policies:
Best For:
#1 provider of workers comp for small businesses
securely through The Hartford Workers Comp's website
Best For:
Start-ups, the self-employed and small businesses
Best For:
Small businesses with both part and full-time employees
securely through Hiscox's website
Best For:
Bundling commercial policies
securely through Progressive Workers Comp's website
Best For:
Matching you to the provider that best fits your needs
get started through Tivly’s website
Other Relevant Insurance Policies to Consider
Here are a few other policies your business may need:
Carefully consider your business's various threats and identify which policies you need. While you might not need all of the coverages identified above, it’s vital to protect your venture from accidents, disasters, litigious consumers and intentional malicious acts.
Check Out the Top Cannabis Insurance Companies
Companies offering cannabis workers’ compensation insurance have many options. A great policy will protect your business from the financial repercussions of a worker injury or illness while also ensuring your team members' medical needs are met.
As you begin comparing coverages and policy terms, it’s important to seek out carriers that understand the cannabis industry's specialized needs. Carma Cannabis Insurance is a leading hemp and cannabis insurance company. Visit CARMA365 to learn more about their coverage options and request a free quote.
Frequently Asked Questions
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You must be proactive about worker safety. Implementing safety programs and conducting regular training will help reduce the risk of claims, thereby keeping your insurance costs lower over time.
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Workers comp policies typically cover all non-intentional injuries and illnesses that occur during a person’s normal duties in the cannabis business. Some common examples include slips and falls, exposure-related illnesses and repetitive strain injuries.
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Yes, remote employees are typically covered if their injuries or illnesses are work-related. For example, a person who handles all of your clerical work and performs lots of manual data entry could suffer carpal tunnel syndrome and would likely be covered by workers’ comp.
