Directors and Officers Insurance For Canadian Cannabis Companies

Directors and Officers Insurance For Canadian Cannabis Companies

Directors and officers insurance for Canadian cannabis companies is not the first thing you think of when you think of the Canadian cannabis industry and isn’t even the first thing you think of when you think of insurance for Canadian cannabis companies. However, in most cases directors and officers insurance for Canadian cannabis companies should be the first thing people that have or are considering launching a cannabis company should consider as directors and officers insurance for Canadian cannabis companies can be the most valuable insurance for Canadian cannabis companies given the significant opportunity and risks associated with the industry.

Why Is Directors and Officers Insurance For Canadian Cannabis Companies So Strongly Recommended?

Estimated to become a $5-$20 billion annual market in Canada, the Canadian cannabis market is a very lucrative market and is attracting all sorts of investors from celebrities like Snoop Dogg to private equity firms, high net worth individuals, institutional investors, cannabis enthusiasts and others just looking for returns from a new and exciting industry. There is almost a “gold rush” mentality to getting in early and investing heavily on what are believed to be the best potential Canadian cannabis companies and billions of dollars have been raised already to support this industry.  However, there is still a considerable amount of uncertainty and risk that facing Canadian cannabis companies which makes being part of the board of directors for a Canadian cannabis company risky including:

• Details/specifics of legalization
• Scope of products that will be legalized i.e. edibles? oils? etc.
• Market price of a product
• Amount of capital needed to build facilities, pay staff, execute on marketing plans, transportation etc.
• Methods, controls and effectiveness of distribution
• Fierce competition
• Completely new marketplace
• Unproven business models/plans
• Types of shares and share structures being offered
• Uncertainty & risk around the valuations of Canadian cannabis companies which share offerings, private placements, RTO’s & IPO’s is based upon.

What Does Directors and Officers Insurance For Canadian Cannabis Companies Cover?

Running and growing any business successfully is difficult and when you add in the risk factors outlined above it makes things even riskier and it becomes easy to see how a “wrongful act,” such as an actual or alleged error, omission, misleading statement, neglect or breach of duty could occur and result in litigation from the shareholder(s) and/or stakeholder(s). Thankfully directors and officers insurance for Canadian cannabis companies are available through the expert Canadian insurance brokers at ALIGNED Insurance.   Directors and officers insurance for Canadian cannabis companies cover the past, present and future directors and officers of the company as well as employees, like a controller, for defence costs and any settlements or judgments associated with litigation from stakeholders for allegations of breach of duty and/or misrepresentation.