Cannabis Insurance 101

June 14, 2022
by Amanda Kugler

While you may be familiar with business insurance, that does not always translate to a full understanding of cannabis insurance. As a highly regulated industry and an ever-evolving legalization landscape, it is important for business owners to be clear on the terminology and ins and outs of cannabis insurance and how it may differ from policies they are used to. Here’s a few terms that we believe will help you have a better understanding during your search for insurance for your cannabis operation.

What do all these insurance terms mean?

Those shopping for insurance will hear the term carrier. A carrier is going to be the actual company that is placing the insurance policy. Think about your car insurance, Progressive is an example of an insurance carrier for automobiles. And then if you work through an agency to buy a policy, you will have an agent. In the cannabis space it is imperative to seek out carriers that will cover cannabis businesses and an agent that is well versed in writing policies in the space.

What should my cannabis company be careful of when picking insurance?

Insurance agents write a lot of business within national markets like Hartford, Progressive, State Farm, SafeCo, and they all have underwriting guidelines. Underwriting guidelines will tell you what is eligible and what is not eligible. Cannabis is on the ineligible list every time. The risk is that if you don’t disclose to your carrier what your business does if there’s a claim, the carrier has the ability to deny your claim due to misrepresentation on the insurance application.

Although no one likes to read the lengthy 200-page documents that come from an insurance company, it is still important that you understand your policy, what you are buying and what your coverage is. When you are talking about insuring millions of dollars it is vital to your operations to have someone on your team who has read the documentation of the policies and understands what is covered.

To learn more about who to partner with for all your cannabis business needs, contact Backcross Solutions. For more information on cannabis specific insurance policies, contact Amanda Kugler at The Roots Insurance.