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Your Guide to Cannabis Insurance Carriers

Forrest Bennett Dec 19, 2022 11:14:20 AM
cannabis insurance carriers

Despite marijuana’s legality in 37 states, there is still the stink of illegality attached to it. Due to its Schedule 1 substance classification, financial institutions from banking to insurance are hesitant to get in on the action. This has minimal effect on it as a product, as the cannabis industry has produced over $28 billion in revenue. 

In the eyes of consumers, your cannabis business is no different from any other of its kind. Hemp, cannabis, and CBD products are all just that — products.

Grow operations are agricultural businesses, manufacturers and processors develop consumable products, and dispensaries are the retail operations that deliver those goods. 

So insurance companies have to walk a fine line. They acknowledge the federal stigma of marijuana by insuring it conservatively, but also have to insure these businesses as they would any other. 

Regardless of what type of cannabis business you have,  it has to be protected. Let’s delve into the nature of insurance, how it’s offered, and why it’s crucial for the future of your cannabis operation. Since this industry is so complicated, if you need any help, you're always welcome to reach out to us today about your cannabis insurance needs. 

The Purpose of Insurance

Insurance may seem convoluted, but when you set aside all the fine print and complex details, it has one true purpose: to protect you and your business from unexpected and financially detrimental circumstances.

Cannabis insurance issues differ from other businesses due to the high-risk nature of these businesses.
The legal dispute over marijuana between state and federal levels has caused stringent regulations and varying requirements state by state. As such, insurance for cannabis businesses needs to be tailored to each business and its needs. Not just for cost-effective coverage but for legal reasons as well.

So if the industry has exploded, why the hesitation from insurance carriers? Insurance companies are data crunchers — their insurance products and prices result from coverage history and past claims. Because of the scrutiny, cannabis businesses face from regulation and federal protocols, the bet seems too risky for most insurance companies. 

So the insurance they offer is priced exorbitantly, practically unrealistic for most businesses. Businesses respond by settling for low-priced insurance options for minimal coverage or high-priced insurance items for seemingly “all-inclusive” coverage that is often hardly that. 

Who Can Deliver Coverage

There are all sorts of insurance offerings and people who deliver them. Captive agents offer insurance products from an exclusive provider. Because of this exclusivity, their offerings are limited in scope to their company's offerings.

Conversely, there are independent agents who act as free agents. They analyze, comparison shop, and curate insurance packages for businesses based on the offerings of multiple insurance carriers. Hopewell is an example of an independent insurance agency.

Insurance policies vary widely in cost due to the specific underwritings and the coverage limits provided. Though you specify what you need, an insurance quote from one carrier will be completely different in both cost and provisions. This makes it difficult to compare and determine if you’re getting a cost-effective solution between carriers. 

Only independent agents can handle the research, analysis, and curation cannabis insurance requires. By utilizing their existing relationships with insurance carriers and constantly developing new ones, they work to get you insurance solutions for your unique business. 

Where established insurance carriers have reacted cautiously to marijuana, new companies have offered insurance solutions specifically for cannabis businesses. An independent agent can determine whether an insurance carrier struggling to adapt or a newer, less established insurance carrier developing cannabis-specific insurance will be the best for your business.

Types of Insurance that Helps the Cannabis Industry

Insurance services come in handy when your business is left alone to deal with the fallout from both mundane annoyances and cataclysmic disasters. They do this by paying out on claims that fall under the purview of your insurance coverage. 

They don’t do this out of the goodness of their heart — it’s a mutually beneficial relationship. You pay for business insurance, often in the form of many policies, through premiums. When tragedy strikes, the funds that help you get back on your feet come from that fund.

Be it legal, medical, or property expenses, insurance offers financial help in the form of policies like: 

  • General liability insurance
  • Commercial property insurance
  • Workers’ compensation insurance

This coverage is not unique to the marijuana industry. Any business can benefit from policies like this. So much so that many states, lease agreements, and contracts require one or all of these policies for businesses. 

As marijuana and related businesses grow, relevant insurance options have become obvious and necessary. These businesses incur heavy operational, regulatory, and security risks which cause insurance to be vital for their financial futures. 

These insurance options help other businesses but are especially beneficial to cannabis-related businesses (CRB): 

Professional liability insurance: Your budtenders often give advice to new customers, advising them about strains, flavors, and methods of intake. Different people react differently to every cannabis product be it edibles, flowers, or concentrate. As such, if they react poorly or don’t like their high, they can hold your business or any level of that product’s production accountable. Professional liability insurance can protect your business from the costly results of such litigation. 

Product liability insurance: With the constantly changing tolerance and testing limits, cannabis products are never a sure thing for long. No matter what kind of marijuana product your business grows, processes, or dispenses, it is susceptible to product recall. Similarly, if a customer finds a product defective or damaging, they can sue any business that handled it. Product liability insurance offers coverage for the fallout of these circumstances. 

Your business can encounter any of these dire situations. Insurance solutions, though annoying to acquire, make sure you’re protected when the worst happens.

What This Means for Your Business

You need an ally through all these changing rules and annoying red tape. Insurance companies mean well (we hope anyway) but most are too scared of the risks marijuana poses to make insurance products specifically for it. 

That’s where an independent insurance broker can help. We’ll dig through the legal ramifications and most pressing risks to determine exactly what coverage your business needs. Whether it’s specific to your cannabis business like dispensary insurance or bundling your regular insurance products like employee benefits and commercial property insurance - we can help.  

To ensure you’re on the right track with your insurance carrier, we will act as a liaison to advocate for your best interests. Our involvement will guarantee you don’t waste your time with a provider who refuses to cover cannabis businesses or can only cover them to a minimal extent. 

With a go-between, the whole exchange will go a lot smoother. A broker with cannabis knowledge will know the right documents to provide, what questions to ask, and what insurance your business needs most. 

You can’t go wrong with someone like that in your corner. This will make all the difference, alleviating your frustrations in dealing with the insurance company and any fears you may have about whether your business is protected. Get started with a free estimate for your cannabis insurance coverage today.


Forrest Bennet is the owner and founder of Hopewell Risk Advisors, an independent insurance agency writing personal lines of insurance and commercial policies for industries ranging from cannabis to restaurants. A born-and-raised Oklahoman, Forrest has been fighting to provide great insurance coverage since 2021. He considers Hopewell Risk Advisors “honest brokers in the protection racket.”