Insurance Company Loss Control of Your Cannabis Business

One of the requirements when purchasing cannabis business insurance is your agreement to allow the insurance company to perform what’s called a loss control inspection. The purpose of a cannabis loss control inspection is to help the insurance company know what they’re covering, but also to help you, the policyholder, with safety measures to help you run your business as efficiently as possible by either preventing losses from occurring or reducing the severity of the ones that might occur.

Once the loss control inspection is completed you’ll receive recommendations from the insurance carrier of what changes need to be made to.

The following is a checklist is to aid you to some of the items the loss control consultant will be checking for.

General Requirements:

1. Do you have a current privilege / business license from the town,city, or state you operate in?
2. Have you had any construction work performed in your business since your last inspection?
3. Do you have emergency numbers posted?
4. Do you have an evacuation plan posted if applicable?
5. Is there a fire department Knox Box? (hazardous materials, fire alarm system, sprinkler system).
6. Are the correct keys in the Knox Box?
7. Are handicapped signs installed in accordance with State Code?

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Street Address:

Is your street address number / suite number plainly visible and legible from the street? Each locality has an ordinance with requirements for how street addresses need to be posted. For example, street numbers should be a minimum of 12 inches in height, and the suite number, if applicable, should be not less than 6 inches in height. The numbers shall be in a contrasting color with it’s’ background and on the outermost surface of the building.

Emergency Lights / Exit Signs:

1. Are all emergency lights and Exit lights operational and unobstructed?
2. Is emergency lighting provided at all exits, corridors and stairwells?
3. Battery or emergency backup power is required for Exit and emergency lighting.
4. Do you have an emergency generator? Is it tested monthly including an annual full load test?
5. Provide records for all testing and maintenance of emergency generator, emergency lights, and exit lights.

Means of Egress and Fire Separations:

1. Are there any holes in the walls separating you from adjacent tenants, especially above any drop ceiling?
2. Are fire doors operational and not blocked or secured in place?
3. Are stairwell handrails secure?
4. Is access to exits and exit doors clear of obstructions?
5. Are Exit doors operable without the use of a key or special knowledge or effort?
6. All locking devices shall be of the approved type.
7. Panic hardware is required for certain businesses.

Portable Fire Extinguishers:

1. Are there portable multi-purpose dry chemical fire extinguishers (minimum rating of 2A:10B:C) available on each floor? One extinguisher is required for every 3,000 square feet of floor space and within a 75 foot travel distance. Restaurants and Industrial businesses may require additional specific types of fire extinguishers.
2. Have the fire extinguishers been inspected within the past 12 months, and tagged?
3. Are fire extinguishers properly charged and mounted on the wall no more than 48 inches above the floor, and readily visible and accessible?

Sprinkler / Fire Suppression Systems:

1. Is your building sprinkled?
2. Has the sprinkler system been inspected and tested within the past year? Submit copy of test report by a licensed contractor.
3. Do you have a fire pump? Submit copy of annual inspection test report by licensed contractor.
4. Are the sprinkler system risers accessible?
5. Is storage at least 18 inches below sprinkler heads?
6. Is the fire department connection unobstructed and caps in place?
7. Are on site fire hydrants unobstructed?
8. For those risks with cooking operations:
9. Does the kitchen have a UL 300 compliant, wet chemical fire suppression system with nozzles covering all cooking surfaces?
10. Are all open flame cooking and/or frying operations conducted under a non-combustible powered ventilation hood?
11. Does the cooking/frying equipment have an automatic fuel supply cut off?
12. How often are fire suppression system(s) serviced?
13. How often are hoods and ducts cleaned?

Fire Alarm System:

1. Do you have a fire alarm system?
2. Who is it monitored by? ______________________
3. Has the fire alarm system been inspected and tested within the past year?
4. Is the fire alarm panel accessible?
5. Are horns and strobes unobstructed?
6. Do you have a key to the fire alarm control panel and pull stations?

Electrical Safety:

1. Maintain 36 inches of clear space in front of and around electric panels.
2. Ensure panel box and breakers are labeled for correct use.
3. Extension cords, flexible cords, and multi-tap adapters are not permitted.
4. All electrical devices shall have face plates installed.
5. Maintain clearance around water heaters and other heat producing appliances, such as a furnace, pedestal transformer, etc.

Housekeeping:

1. Rubbish and trash build-up shall be maintained at a minimal level and removed at least daily.
2. Storage under stairs is prohibited unless the stair is protected from the bottom by a fire rated enclosure.
3. If flammable, combustible, or hazardous material is used or stored, by permission, Material Safety Data Sheets (MSDS) shall be available on site.
4. Pressurized cylinders or tanks of any kind (i.e. helium, CO 2, propane, etc.) shall be properly stored and secured at all times.
5. For cultivation operations:                          
   1. Proof a dehumidification system is in place to prevent the growth of mold.
   2. An understanding of what protocols are in place to prevent over watering and flooding. Are flow meters and water timers used?
   3. A list of fertilizers/pesticides that will be used the amount and location of where it will be stored on the premises.
   4. Having a list and the location will be handy in case of an emergency it can be provided to firefighters so they know what and where it is stored inside.
   5. What plan is in place for disposal of waste water?
6. For processing/extracting operations: What fire suppression measures are in place?
   1. Is the butane/propane extraction isolated or located in a partitioned area of the building?
   2. What level of experience do the tenants have with extraction equipment and explosive solvents.
   3. Is there a gas leak alarm?
   4. Is there a fire alarm?
   5. Is there a sprinkler system in the extraction room?
   6. Is there a spark proof electrical system in place for the extraction room?
   7. Is there an emergency ventilation system in place?
      
      

Again this is a general checklist and may not include all the items that your business will be required to comply with.

Reach out to me when you’re considering cannabis business insurance. I will discuss coverage’s with you, how each coverage works and assess how it fits into your risk management needs. I will provide you with comparative cannabis business insurance quotes from multiple insurance carriers so you can get the best possible rate.

As an insurance broker I help cannabis businesses manage risk through insurance.​ I'm available to discuss my experience or any questions you may have.

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