Workers’ Compensation for the Cannabis Industry: What Every Business Needs to Know
Protecting Your Cannabis Business & Employees
The cannabis industry is experiencing rapid growth, with sales expected to surpass $73 billion by 2027. However, with expansion comes increased workplace risks, and many cannabis business owners overlook a crucial element of protection—workers' compensation insurance.
From dispensaries and cultivation farms to distributors and delivery services, cannabis employees face unique hazards daily. Without proper workers’ compensation coverage, businesses risk major financial losses, legal battles, and non-compliance penalties.
So, what makes workers’ compensation for cannabis businesses different? Let’s break it down.
What is Workers’ Compensation Insurance for the Cannabis Industry?
Workers' compensation insurance covers medical expenses, lost wages, and rehabilitation costs when an employee gets injured or sick on the job. It's legally required in most states for any cannabis business with employees.
But here's the catch: Traditional insurance providers often exclude cannabis businesses, leaving many companies uninsured and exposed to lawsuits. This is where specialized cannabis industry coverage—like the one offered by Starisks—comes in.
Why Cannabis Businesses Face Higher Risks
The cannabis industry involves unique workplace hazards that make workers' compensation insurance even more essential.
Common Workplace Risks in Cannabis Businesses
Chemical Exposure & Respiratory Issues – Growers work with fertilizers, pesticides, and mold exposure, leading to respiratory illnesses.
Electrical & Equipment Hazards – Indoor cultivation requires high-voltage lighting and irrigation systems, increasing risks of electrocution, fires, and injuries.
Repetitive Strain & Heavy Lifting – Trimmers and packagers perform repetitive tasks that can lead to carpal tunnel syndrome, back injuries, and muscle strain.
Delivery Accidents & Vehicle Risks – Cannabis delivery drivers face road accidents, while dispensaries risk armed robberies due to high-value cash and product storage.
Is Workers’ Compensation Insurance Required for Cannabis Businesses?
YES! In most U.S. states, cannabis business owners are legally required to provide workers' compensation coverage for their employees.
State Requirements Example:
California, New York, Colorado, and Connecticut mandate workers' comp for all cannabis businesses, including part-time employees.
States set their own requirements, but most follow National Council on Compensation Insurance (NCCI) classification codes to determine premium rates.
Non-compliance could cost you:
Fines up to $100,000
Employee lawsuits
Business license suspension
What Does Workers' Compensation Cover for Cannabis Employees?
A well-structured workers' comp policy should protect both your employees and your business.
Coverage Includes:
Medical Bills – Covers emergency care, hospital visits, prescriptions, and rehab.
Lost Wages – Replaces a portion of an employee’s income if they can't work due to injury.
Disability Benefits – Supports workers with long-term or permanent injuries.
Death Benefits – Covers funeral expenses and provides financial support for dependents.
Employer Liability Protection – Pays for legal fees if an employee sues your cannabis business over a work-related injury.
How Much Does Workers' Compensation Cost for Cannabis Businesses?
Workers' comp insurance rates for cannabis businesses depend on three factors:
Employee Classification Code – Risk level of each job (e.g., dispensary worker vs. cultivator).
Payroll Size – Higher payroll = higher premiums.
Claims History (EMR Rating) – Fewer past claims can lower insurance costs.
Did you know? Many traditional insurers charge higher premiums or deny coverage altogether for cannabis businesses due to federal restrictions. Working with a specialized provider—like Starisks—ensures you get the right coverage at the best rates.
How to Lower Workers’ Compensation Costs
A safer workplace = lower insurance costs! Here’s how cannabis businesses can reduce workplace injuries and keep premiums low:
Employee Safety Training – Teach proper handling of equipment, security procedures, and injury prevention techniques.
Slip & Fall Prevention – Keep floors clean, install proper lighting, and remove obstacles.
Equipment Maintenance – Ensure that grow lights, HVAC systems, and machinery are regularly inspected.
Loss Control Strategies – Work with an insurance provider like Starisks to implement custom risk management solutions.
Other Important Insurance Policies for Cannabis Businesses
Workers’ compensation is just one piece of the puzzle. To fully protect your cannabis business, consider these additional coverages:
General Liability Insurance – Covers customer injuries (e.g., slip and fall at your dispensary).
Commercial Property Insurance – Covers theft, fire, vandalism, and damage to your dispensary, grow facility, or warehouse.
Commercial Auto Insurance – Essential for cannabis delivery services.
Why Choose Starisks for Your Cannabis Business Insurance?
Unlike traditional insurance companies, Starisks specializes in cannabis industry coverage—ensuring that your business meets compliance, avoids penalties, and stays protected.
Get a Free Consultation Today! Don’t leave your business exposed. Secure the right workers' compensation coverage now before it’s too late.
