Is Your Cannabis Business Actually Uninsurable?
The 5 Red Flags Carriers Look For (That No One Tells You About)
You’ve got the license.
Your facility is humming.
Your products are flying off the shelves.
On the surface, your cannabis business looks solid. But here’s the truth: none of that matters if an insurance carrier flags you as high-risk.
It happens quietly. One compliance slip, one security gap or one financial inconsistency—and suddenly, your renewal notice doesn’t come through. Many seemingly successful operators are just one audit or inspection away from being dropped by their insurer.
So how do carriers really decide who makes the cut and who doesn’t?
Let’s talk about the five red flags that can make an insurer deny your application or cancel your policy altogether.
1. The Compliance Gray Area
What it looks like:
Small METRC inconsistencies, labeling that is “close enough,” or documentation that doesn’t perfectly match what regulators require.
Why it matters:
Carriers see this as a fundamental breakdown in risk control. Even minor compliance issues can trigger a Violation of Law clause, giving the insurer an easy reason to deny a claim. To them, it’s about exposure and not intent.
2. Inadequate Security Protocols
What it looks like:
A strong security plan on paper, but blind spots in execution. Cameras missing coverage, access logs not maintained, no formal incident response process.
Why it matters:
This is the #1 predictor of theft and liability claims. Insurers routinely request security footage and audit logs; some even perform on-site inspections. If they sense any weakness, your premium spikes or your application stalls.
3. Financial Instability
What it looks like:
Inconsistent revenue, poor bookkeeping, or reliance on risky payment methods.
Why it matters:
Financial distress is a red flag for fraud risk. Insurers know that struggling businesses are statistically more likely to experience “unexplained” losses or worse, intentional ones. A clear financial paper trail shows you’re managing the business, not just surviving it.
4. No Formal Risk Management Plan
What it looks like:
You have policies, but they live in someone’s head and not in writing. No documented process for employee safety, product handling, or disaster recovery.
Why it matters:
Carriers can tell when you’re being reactive instead of proactive. Having a written risk management plan signals maturity—it tells the insurer you’re not just transferring risk to them, you’re actively managing it.
5. A History of Being Dropped
What it looks like:
A prior policy was canceled or not renewed.
Why it matters:
This is the hardest to recover from. If one insurer labels you “too risky,” others will assume the same unless you can clearly explain what changed. Having an advocate who understands how to rebuild your insurability is crucial.
Here’s the reality
Spotting even one of these red flags in your own operation means you’re at risk of not just higher premiums but of losing coverage entirely. And once that happens, getting re-insured can be an uphill climb.
That’s where Starisks Insurance comes in.
We don’t just sell policies. We help you become the kind of business carriers WANT to insure. Our cannabis insurance specialists review your operations, identify gaps before the carrier does, and connect you with underwriters who understand the realities of your industry.
Because being insured and being insurable are two very different things.
Don’t wait for a denied claim to find out where you stand.
Book a complimentary Insurance Check with Starisks.
We’ll review your compliance, security, and operational practices to help ensure your business is protected—and actually insurable.
