Last year was not a good year for Denver cannabis businesses, at least not in the number of reported break-ins, which recorded a three-year high.
Dispensaries and grow operations were the most commonly targeted locations for these crimes, and some of the heists might have been pulled off by the same gang of burglars, according to police.
None of this is exactly new for cannabis businesses, although the number of break-ins is certainly up, fueled in part because the bad guys know many cannabis-related businesses are cash-only operations and because they can sell any marijuana they steal on the black market on the East Coast for substantially more than it sells for here.
“It’s like cash in hand,” Denver police Cmdr. James Henning told the Denver Post. “Marijuana at wholesale price (in Colorado) is going for $1,200 per pound … but if you take that same pound of marijuana to the East Coast, it’s worth $3,000 to $3,500.”
All of this helps explain why many insurance carriers will exclude Assault & Battery or offer only limited coverage for cannabis businesses. And it’s why a business’s location and its security features are so important, whether we’re talking about a dispensary, processor or distributor.
In determining whether to issue a policy at all, let alone set rates, insurance underwriters will often review the crime-prevention measures employed by a business to prevent crime.
ID checks, employees assigned to monitor customers while they’re in the store, a limit to the number of customers allowed inside the location, and surveillance cameras all help.
For bigger operations, including cultivators, carriers like to see armed security, trained dogs, and armed car service to transport product.
Different states have imposed various security regulations on cannabis companies – Colorado, for one, mandates 24-hour camera coverage – but we know that many operators struggle with compliance.
The better approach is to not scrimp on security. We know of retailers who store their finished product in safes that are bolted to the floor, have installed concrete bollards, high decimal alarms and strobe lights that respond to a break-in.
The bottom line here? The more robust your risk management program is, the better your coverage options will be and the better your rate might be.
By the way, it’s important to note that while break-ins at cannabis businesses reached a three-year high in 2019, crimes related to the industry accounted for less than 0.30% of Denver’s total offenses in 2018 – underscoring that fears of a crime wave that would follow the legalization of cannabis were overblown.
Oh, and one more important note: Think twice before arming your employees.
Security experts warn that the risks often outweigh the benefits of having armed employees.
For starters, expecting your workers to pull the trigger and potentially kill someone is asking a lot. Secondly, ask yourself whether a gun battle is really what you want in the middle of your business. Better to train your employees to give the robbers the cash and cannabis and make sure everyone gets to go home to dinner.
Spencer Mahoney is CCIG’s Executive Vice President and head of the firm’s cannabis practice. Reach him at 720-212-2051 or Spencer.Mahoney@thinkccig.com
CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.