According to Statistics Canada, more than $6 billion of cannabis products have been sold in the past three years. Meanwhile, consultancy New Frontier Data reports since cannabis was legalized in Canada in October 2018, sales increased from $206 million in the fourth quarter of 2018 to more than $1.3 billion in the second quarter of 2021. The report projects legal sales in Canada are expected to grow to $5.2 billion by 2025.
But how can cannabis companies grow their businesses and tap into what promises to be a lucrative market? According to its “2021 Cannabis Consumer Report”, Deloitte notes existing consumers represent the most significant volume growth opportunity, accounting for 75% of cannabis-volume consumption, with 54% of existing customers saying they only purchase cannabis from legal sources. However, 26% say they buy cannabis products from legal and unlicensed sellers, the latter primarily because of cheaper prices.
Furthermore, Canadian consumers surveyed in Deloitte’s report indicate a demand for a variety of products beyond smoking cannabis dried flower, such as edibles, topicals, and beverages. That suggests there’s an opportunity for small businesses to tap into by diversifying their product lines and driving growth.
Risk Management Considerations for Cannabis Small Business Owners
From cultivators and producers to distributors and retailers, small business owners in the Canadian cannabis industry know they must overcome several hurdles to determine where and how to budget for success. That calls for a thorough risk management strategy that includes cannabis business insurance to help deal with the top five risks they face, including:
- Theft. Cannabis industry small businesses may be prime targets for theft, whether from within (theft by employees), while products are being transported, or the risk of robberies and break-ins at their locations.
- Following provincial and federal regulations. The regulations small businesses in the cannabis industry must adhere to may vary between one province and another. Regardless, maintaining compliance is vital to the survival of your business.
- Cannabis product tampering. Any cannabis product that has been tampered with may cause physical harm to your customers, and in turn, expose you to third-party bodily injury lawsuits. Keep in-store products secure and properly labelled, and ensure your manufacturing partner runs a compliant, reliable, secure facility.
- Public perception. The public’s perception of the cannabis industry may not be rosy. At times fuelled by mainstream media coverage, a negative perception leaves many with the impression that producing and selling legal cannabis is a risky venture. That can affect small business owners in several ways, including finding commercial property insurance, and attracting talent to work in the industry.
- Financial challenges. Obtaining financing to kickstart a small cannabis business remains an uphill climb. In the U.S., federal law prohibits American-affiliated financial institutions from lending money to cannabis companies stateside and Canada.
Getting Business Insurance for Cannabis Industry Companies
A comprehensive cannabis insurance policy is essential for all small businesses participating in the industry. Whether your cannabis company is a manufacturer, distributor, retailer, or medical dispensary, get a free quote from Zensurance by filling out our online application. Then, if you have questions about your options or wish to discuss your concerns with one of our licensed brokers, they’re just a call or click away.