Building a business is an incredible feat. Thousands of hours and countless dollars went into turning your vision into reality. But now that your investment is finally providing returns, how are you protecting it? Working with financial planners to secure insurance, patents, and even the dreaded last will and testament can make all the difference in ensuring your company’s sustainability.
First and foremost, defend your intellectual property (IP). You created an original brand, you’re creating new products, graphics, and blogs, and you have a unique methodology for executing your business plan. All of that is proprietary information that should be protected from theft.
Josh Camitta is the co-founder of MJ Arsenal, an online retailer of specialty smoking accessories. He’s well-versed in the complexities of patent law and has dozens of patents and trademarks to protect his brand’s unique identity and IP. “Always assume you will have ten different companies trying to knock off your product,” advised Camitta in an interview with Green Entrepreneur.
Invest in an IP attorney. They’ll evaluate your business and identify which products and ideas can be trademarked or patented. Even illegal products can be patented while you wait for legalization laws to pass. Camitta offers this advice: “Consider your IP portfolio an extension of your insurance policies. You hope to never need them, but, damn, will you be glad if and when you do.”
That brings us to the next point: insurance. Coverage can vary widely from state to state, and some don’t require business owners to have any coverage at all. However, anyone hoping to avoid loss of income from business interruptions, cyberattacks, product recalls, or lawsuits would be wise to invest some of their hard-earned dollars back into the business by purchasing insurance.
There are a variety of insurance options available, each with its own appeal. We spoke with Certified Financial Planner Norm Chevlin, founder of Plant Your Financial Seed, to learn when to seek the advice of an expert: “I come in when a business owner, whether it’s a hemp farmer, a cultivator, a dispensary owner, or a bakery that deals in cannabis, is actually up and running and now needs to protect what they’ve built for themselves in terms of having the proper types of insurances.”
In short, general liability will protect your business against third party claims of negligence, whereas product liability will protect you if your products cause someone bodily harm. Recall insurance pays you back for time lost to a product recall, and commercial auto coverage will protect any assets that might be damaged due to an auto accident.
Further, key person life insurance can safeguard your company in the event of your untimely demise. With key person insurance, the business is the policy beneficiary, rather than a family member or close friend.
A digital will is also advisable so your employees and loved ones can access your digital assets without having to apply for a court order. The unexpected death of Gerard Cotten, the CEO of Canada’s largest cryptocurrency exchange, cost his customers $190 million in cash and cryptocurrency because no one could access his laptop after he passed away.
Obtaining coverage isn’t always easy. As with most cannabis-related business decisions, there’s an extra layer of complication due to the federal classification of marijuana as a Schedule I narcotic. Many insurance companies won’t work with you if they believe you’re paying them with money from your business.
Chevlin elaborates: “The biggest thing insurance companies are looking at is where the funds are coming from to pay for the insurance. Are they strictly coming from the cannabis-related business, or are they coming from the owner’s personal funds? If it’s coming from personal funds it’s much easier to get insured.”
Ultimately, protecting yourself and your assets is a complex field that varies state to state. It’s not something to take on by yourself. “Have a proper team behind you – legal, accounting, and financial planning – if you have any intentions of entering this space at all. There’s a lot you need to know, and you can’t just wing it,” advises Chevlin.