Does Your Cannabis Business Need Professional Lines Liability Insurance?

A professional lines liability policy provides financial protection for claims of negligence that are brought against a business by a third party, due to a product or service the business provides. Today, nearly every cannabis business has some type of professional liability exposure.

Triggers for these types of claims include:

  • An act, error or omission brought against you while performing client services.
  • A product that you sell or a service that your business provides that fails to perform as expected. 

A common example in the cannabis industry would be a dispensary owner who recommends that a customer use a product sold by the business in a particular way to achieve a specific result. Giving this type of advice could lead to a costly liability claim against the dispensary owner if the customer decides that he or she was given incorrect or harmful information.

If held liable, the business could be forced to pay a settlement or judgment award. Even if the claim is unfounded, the dispensary could still be on the hook for defense costs that could be in the thousands of dollars. Simply put, a professional liability policy provides financial protection by paying defense costs as well as settlement or judgment awards in cases that are brought against the business.

It’s important to note that a professional liability insurance policy is not the same as your business’s general and product liability policies, and it will not cover claims brought against the business that are associated with:

  • Bodily injury/property damage
  • Product liability
  • Harassment and discrimination
  • Criminal acts and securities violations
  • Employee benefits violations
  • Privacy law violations

The unfortunate reality is that we live in a litigious society where consumers can sue a business for any number of issues. Having a professional liability policy can help protect your cannabis business from claim costs if a customer alleges that a product you sold or a service your business performed wasn’t as expected.

Insurance for the cannabis industry is complex. If you’re not sure where to start, contact the experts at Oakwood D&O. We’ll help you decide on the coverage your business needs and tailor a policy based on your budget.

To learn more, contact Eli Solomon, CEO, at or call 323-686-7519. You can also follow Oakwood D&O on LinkedIn.