Dispensary entrepreneur Adam Fong got tired of having his San Rafael, California operation being broken into. The business suffered five break-ins starting in 2019, with the biggest loss coming from the first theft – $10,000 worth of product and $20,000 in cash.
Fong, who has built his Northern California-based business into a well-known name in the cannabis industry – Nice Guys Delivery – started to make incremental changes to his operation after that first break in, continually looking to make it harder for would be crooks to get in.
He watched surveillance videos and studied how the thieves were trying to enter his facility, then he used his welding skills to create security systems to prevent criminals from being able to enter.
He fortified and fortified. He made all the access points more secure, and the doors stronger – he even built a custom entrance for the main door. His security systems have since deterred criminals from entering his facility on multiple occasions.
Fong’s experience with dispensary theft aren’t unique. Thefts at dispensaries are common, becoming a big talking point in the industry for a number of years.
Cannabis operators are beefing up security, and in some cases they are custom fortifying, in hopes of making a case to carriers for lowering premiums. One well-known cannabis business, Nice Guys Delivery, is even launching a custom fortification operation to capitalize on what owners believe will be a trend.
Our latest podcast episode features Adam Fong, owner of Nice Guys Delivery, and his broker Valerie Taylor with The Liberty Company Insurance Brokers.
Following are takeaways from that conversation.
“You know, operating in cannabis business in California, it’s a dangerous territory because, you know, most cannabis businesses are seen as soft targets,” Fong said. “We opened in 2016, and we’ve had five break-ins total. Our first break-in was in 2019. The second one happened in 2022. And unfortunately, we had three in 2023. The only substantial losses that we had were the first break-in, in 2019, just because we weren’t prepared. We were comfortable in the space we were in. And it’s been a learning process since then.”
It started off in 2019 with Fong just fortifying the windows. Then they addressed all of their access points, and finally he built a custom entrance for the main door. As time has passed, the security has gone through several reiterations and redesigns.
“As of now, I think we have a really good system, and it really brings a lot of comfort to being in the cannabis business,” he said. “Having being broken into really does a lot to a business owner’s confidence, but, you know, security really, really helps us be in the space and feels safe.”
Taylor said in the last few years more dispensary owners are beefing up security to make a case to carriers for lower rates – something she has been proactive in helping her clients do.
“I think that things have changed significantly since probably I’d say 2020 in terms of preventative measures,” she said. “So it used to be that an operator would leave the theft idea towards almost the end – they would sort of say, ‘OK, now we’re gonna open, let’s hire some, some guards.’ Now, what I’m seeing is that security consulting companies are in at the design process. So very early on they are already thinking of custom fortification, entry points and standard security measures that carriers require to meet the theft warranties that have to be met.”
That is where she ties it all back to insurance for her clients, making sure they understand thes theft warranties.
“If they’re not met, there’s no coverage in a theft,” she said. “So, a lot of times, people aren’t explaining this, so I like to go over that to make sure everyone’s on the same page.”
These steps may not immediately show a direct correlation to rate decreases, it does help build a case, according to her.
“So, I build the story of, ‘Here are all the elements that are being put into the design. Here’s everything that the clients are doing to mitigate or prevent claims.’ You know, it’s becoming more common that there is a claim on a client’s, loss history. And so, what I do is say, ‘OK,’ well what happened? What did they do about it?’ And in Adam’s case, it’s sort of a perfect scenario to build a story to carriers because he’s done so much about it. So it helps, i it’s used as an element to negotiate to carriers why they should provide better rates. It’s not a direct correlation, it’s just part of the story that I build to help negotiate.”
Related:
- Takeaways from Our Conversation on Cannabis Podcasts
- Takeaways from Our Conversation on Carrier-Broker Relations
- Takeaways from Our Conversation on ‘Behavior Products’
- Takeaways from Our Conversation on The Science of Cannabis and Toxicology
- Takeaways from Our Conversation on Selling Cannabis Insurance in Tougher Times
Topics California Cannabis
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