Insurance for Cannabis

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Overview

Cannabis is an exciting emerging sector that poses unique challenges and risks. The industry is projected to grow to $146.4 billion by 2025. As the industry grows and becomes more regulated, so does the risk exposure.

The uncertainty surrounding the legality of marijuana has lead to many major insurance carriers being reluctant to offer insurance to the industry and presents obstacles finding the right insurance policy. Many cannabis companies struggle to get quotes and can be left with substandard insurance policies with significant gaps in coverage.

This is why it’s so important to work with an insurance broker that has access to the top industry carriers, a proven track record of placing insurance and managing claims for Cannabis companies. At Founder Shield, we have build a cannabis-specific subsidiary, AlphaRoot who partners with the leading international insurance carriers that design policies specifically for cannabis companies. We work with some of the top public cannabis companies in the US and Canada and craft tailored risk management programs that allow them to focus on the things that matter, growing their business.

Why is Insurance for Cannabis Companies Important?

Insurance is a vital way of managing risk for all industries, and Cannabis is no exception. As an emerging industry built around a federally illegal (and, in many places, currently illegal) substance, the cannabis industry is especially risky. Companies must navigate new, evolving and uneven regulations. The legal climate sometimes seems to be changing daily, making it hard for companies to keep up. Multiple recent lawsuits have highlighted the importance and a solid D&O policy for cannabis companies:

  • Cronos Group Inc. has faced securities litigation.
  • MedMen, a cannabis retailer, and its executives have been sued.
  • Aphria Inc. has been hit with a securities lawsuit.
  • CV Sciences, which manufactures and sells CBD products, has been sued for securities violations.
Legal & Regulatory

The legal status of cannabis remains hotly debated in the U.S. The 2018 Farm Bill legalized hemp and hemp-based cannabidiol. Additionally, many states have legalized recreational and/or medical marijuana. However, marijuana is still illegal on the federal level, resulting in a highly complicated legal and financial environment for marijuana companies operating under state laws.

Financial Risk

Federally regulated banks avoid accepting proceeds from a licensed cannabis business or risk losing their federal charters. With traditional banking services limited or unavailable, cannabis firms can be forced to transact business, including paying employees and taxes, in cash. Recently, a Denver, Colorado credit union received approval to receive cannabis proceeds but availability still varies significantly by state..

Product Liability

Proper product labeling is crucial. Even so, bodily injury and property damage could result from the use of the psychoactive drug, and contamination with pathogenic molds, fungus or pesticides could also result in major recalls and liability. According to Denver’s Department of Public Health & Environment, there were numerous marijuana recalls recorded over contamination issues between 2015 and 2017.

Property Protection

Theft, product tampering, or vandalism can delay business operations significantly. Protecting your crop, inventory, and equipment means having a back-up plan for when loss occurs. Acres of cannabis crops are destroyed each year due to vandals. Besides crops, thieves regularly try to steal inventory across the nation. In short, cannabis companies must protect their property.

Types of Cannabis Companies that need insurance

  • Cultivation
  • Dispensaries
  • Software as A Service
  • Greenhouses & Hydroponics
  • Distribution
  • Data & Analytics
  • Infused Products
  • Delivery & On- Demand
  • Grow Automation & Tech
  • Testing & Extraction
  • Ecommerce
  • Media & Content

Cannabis Frequently Asked Questions

The cost of insurance for cannabis companies will depend on several things, including the company’s size and development stage. Other factors include:

  • Exposures: risks being insured
  • Company practices: views on safety, compliance, and risk management
  • Program structure: the amount of deductible and willingness for a company to assume more risk
  • Claims history: the type and amount of past claims against the company

How it works

Finding insurance coverage doesn’t have to be painful. We aim to make the purchasing experience as streamlined & intuitive as possible.

1
Get a quote

Use our custom built online portal to get quotes fast. We automate clerical tasks that plague the traditional insurance brokerages, giving us more time to be responsive and alert to your company’s needs.

1
Get a quote

Use our custom built online portal to get quotes fast. We automate clerical tasks that plague the traditional insurance brokerages, giving us more time to be responsive and alert to your company’s needs.

2
Pair with a specialist

No two organizations are the same. Our team of coverage experts partners with your team to engineer your risk management strategy, together. We take the time to understand the intricacies of your company to get you the best possible coverage.

2
Pair with a specialist

No two organizations are the same. Our team of coverage experts partners with your team to engineer your risk management strategy, together. We take the time to understand the intricacies of your company to get you the best possible coverage.

3
Stay one step ahead

To do better, you need to know better. With changing political, technological, legal and economic landscapes, staying ahead of the curve is critical.

Our in-house team is tapped into the latest developments of your industry, proactively ensuring you’re covered.

3
Stay one step ahead

To do better, you need to know better. With changing political, technological, legal and economic landscapes, staying ahead of the curve is critical.

Our in-house team is tapped into the latest developments of your industry, proactively ensuring you’re covered.

Meet your specialist

Isaac Bock is a Managing Director of Alpha Root. AlphaRoot is a tech enabled insurance brokerage that focuses specifically in the cannabis sector. We’re a team of industry veterans with a long-standing relationships in the cannabis and agriculture insurance space. Our unique expertise allows us to provide customized coverage and access to preferred insurance markets. Prior to working at AlphaRoot, Isaac graduated Cum Laude from the University of Pennsylvania before began his career working at Marsh & McLennan. After two years at Marsh, Isaac joined Founder Shield who is the parent company of AlphaRoot. Isaac is also currently a candidate for his MS in Medical Cannabis Science and Therapeutics Program from the University of Maryland.

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