Cyber risks rise for commercial cannabis operators daily. A recent article by Don Jergler (Insurance Journal, May 2021) has made some really important observations about cyber risks associated with the management of commercial marijuana establishments. Said Jergler, “A lot of the dispensaries have gone to online ordering, delivery, and curb-side pick-up models, . . . they’re realizing more and more of their organization is run online. Most cannabis dispensaries are required to have a seed-to-sale tracking system, particularly those selling medical marijuana, and are also required by the licensing structure of numerous states to maintain data on their clients — making them highly appealing to hackers.” He is correct. The warehousing of customer data, more specifically the very private personal information contained in health dossiers is an incredible exposure to the cannabis operator. Participants in the marijuana distribution sector are almost entirely micro-enterprises, the least likely businesses to survive a significant breach.
Per CDNetworks report on THE INDUSTRIES MOST VULNERABLE TO CYBER ATTACKS IN 2021, “Although media reports focus primarily on larger cyber-attacks such as the breaches at Target, Netflix, and financial institutions including JP Morgan, the most frequent threats have been to small and medium-sized businesses. Industry experts say that 60 percent of SMBs will fail within 6 months as a result of a cyber-attack which can include anything from phishing scams and malware attacks. Furthermore, there are industries that appear to be cybercriminals’ favorites.” One breach can break an operator and/or cause irreparable reputation damage among cannabis clients and with a licensee’s regulatory agency.
Cannabis-specific operators need to heed these warnings, train staff on mitigating the risks and methods for recognizing and avoiding malicious attacks on enterprise, and seek appropriate insurance coverages which will help “keep the doors open” in case of a serious cyber event. Cyber risks rise for commercial cannabis operators daily so proper preparation for what may well be inevitable is imperative.
Surety One, Inc. is a surety bond underwriter offering cannabis surety bonds and insurance consulting to sector participants. Visit our cannabis business surety bond page for products, breaking news in the industry and helpful links for marijuana professionals.
