The cannabis industry is booming, with the compound expected to be worth $50 billion by 2025. As legalization continues to spread across the country, the cannabis market has become more vulnerable to cyber attacks.
Cyber security news is a topic that many people have been talking about recently. There are three cannabis-related cyber attack risks that you should be aware of.
Cyber-attacks have become frequent in recent years. The number and magnitude of ransomware assaults has increased dramatically. In the United States, high-profile data breaches have cost companies millions of dollars in damages and irreparable brand damage. Cannabis cyber attack threats, like those in any other sector, offer a clear and present danger of financial repercussions.
Cyber assaults are becoming increasingly more dangerous as a result of new data-security laws. Attacks may result in regulatory penalties and private lawsuits under the California Consumer Privacy Act (CCPA), for example. Consumers are not needed to show personal losses or harm under the CCPA. Because of the increasing risk of liability associated with cyber assaults, as well as the increased number of attacks, every company must handle the problem. The first step is to increase security, but there is no perfect protection. As a consequence, it’s also crucial to think about how to protect businesses from possible financial losses as a result of an assault.
While cyber insurance isn’t a panacea, it may help cannabis companies manage cyber threats like the one mentioned above. It also covers the costs of investigating and reacting to data breaches and ransomware attacks, as well as any lost revenues due to downtime of computer systems.
As important as these fundamental insurance policies are, cannabis companies have particular dangers that make them more susceptible to cyber assaults and the financial repercussions that come with them. When purchasing cyber insurance, cannabis growers and merchants should think about their other, perhaps more serious cyber threats.
There is no such thing as a “standard” cyber insurance coverage. A plan like this is sold by dozens of insurers, with each one continuously changing its policy terms to market developments and difficulties. As a consequence, cannabis companies must carefully examine and negotiate the conditions of insurance provided to them in order to meet their specific cyber threats. Those that fail to do so risk leaving some of their most serious threats unaddressed.
Here, we’ll look at three of them.
1. Data breaches pose a serious danger to retailers’ reputations.
Retailers gather and store extremely sensitive personal data, including personal health information in certain instances. The sensitivity stems not just from the kind of information, but also from its ability to expose the consumer-retailer connection. Many consumers depend on merchants to conceal their purchases from prying eyes. As a result, a data breach that makes personally identifiable information from a cannabis retailer’s client list public may have real-world ramifications for people whose information is exposed. While cyber insurers usually fight lawsuits seeking such damages, cyber insurance plans sometimes do not cover the retailer’s lost earnings when customers leave to rivals who may be regarded as providing greater security. However, certain cyber insurers provide this coverage, and cannabis merchants should look into it.
2. Growers and producers may suffer property damage or loss that is difficult to insure.
Cultivators’ activities may be reliant on computers, at least in part. A cyber attack or other incident that affects those computers has the potential to harm cannabis crops by disrupting or hindering growth or harvesting processes. Both grape farmers and cannabis cultivators have lost crops to California wildfires in recent years, but there is one significant difference: Producers of grapes may get government backed crop insurance, but growers of cannabis cannot. Cyber insurance policies, which cover cannabis producers for losses caused by cyber assaults, usually exclude coverage for physical damage. As a consequence, cannabis farmers and producers should seek coverage for this risk in collaboration with their insurance brokers and lawyers.
3. Businesses are beset by inconsistencies brought on by conflicting state and federal legislation.
The federal-state divide that cannabis companies confront is not limited to insurance. As a condition of coverage, cyber insurance plans may require the insured company to inform law enforcement about a cyber attack, such as a ransomware assault. When shopping for cyber insurance, cannabis companies should look for clauses like these to make sure their plans don’t put them in a Catch-22 position when it comes time to file a claim. It is feasible to negotiate the removal, or at the very least the adjustment, of such clauses so that they do not constitute insurmountable barriers to coverage.
Cannabis companies often have to negotiate legal and regulatory quagmires. With prior preparation and reliance on the advise of their insurance brokers and lawyers, they can also effectively manage this one. They should think about the kinds of assaults that their companies are likely to face, as well as the financial damages that such attacks might cause. They should strive to avoid and minimize the possible effect of such attacks by implementing current security practices and being vigilant about their information-technology security. Finally, they should be aware of their remaining computer security and financial weaknesses and seek out cyber insurance to remedy them.