Cannabis Insurance FAQs

Frequently asked questions about cannabis, hemp, and CBD insurance.

Everything you need to know to cover your cannabis business.

Home » Cannabis Insurance » Cannabis Insurance FAQs

With the new and constantly evolving cannabis, hemp, and CBD industry, many growers, manufacturers, distributors, and retailers are looking for the right insurance for their business. Read through our frequently asked questions related to the cannabis industry to learn more about the importance of insurance for your business.

What types of insurance is available for a cannabis business?

  • General Liability: Insurance policy designed to protect your business from personal injury and property damage as a result of your business operations.
  • Product Liability: Insurance policy designed to protect your business from claims of sickness or disease as a result of exposure to or consumption of the products you produce.
  • Property Policy: Insurance package designed to protect the capital assets of your organization.
  • Professional Liability: Insurance policy to protect your business from loss events involving failure to perform your professional duty.
  • Workers’ Compensation: Insurance policy designed to protect your business from the expense of a loss that results from an employee being injured while working.
  • Crop Insurance: Insurance policy designed to replace the value of an agricultural product following a covered loss event. These policies can take many forms and may be referred to as crop coverage or stock throughput.
  • Business Auto: Liability and/or property coverage for automobiles operated by employees in the course of performing their job duties. Coverage can be purchased on vehicles whether they are owned by the business insuring the vehicle or in cases where the vehicle is owned by the employee or someone else.
  • Customized Policy Options: Cyber liability, inland marine, product recall, and other options that include claim settlement with claim expense, in addition to (outside of) policy limits that are also available.

I am a landlord with a marijuana, hemp or cannabis based tenant, can you find me insurance too?

Yes, we can help a landlord secure a great policy option from an A-rated insurance carrier that does not mind that you have a tenant engaged in the cannabis industry.

Can you cover my employees if they are hurt on the job?

Yes, we are happy to assist with your workers’ compensation policy needs.

Can I purchase any kind of policy to protect the executives, directors, and managers of my organization?

Yes, directors and officers insurance coverage is available to provide protection for your executive team from a possible claim or loss event relating to their fiduciary responsibility. These policies can also include coverage designed to protect the executives and management team from employment practice (hiring, firing, harassment) related claim events.

I am a processor making a CBD based product, my source material originates outside the US. Can I still get coverage for my products?

Yes, there are insurance carriers that provide excellent policy options for CBD and businesses producing products in the cannabis health and beauty aid (CHABA) market segment.

I have been told that it is hard to get proper insurance if I make or fill cartridges intended for use in a vaporizer. Is that true?

Yes, several insurance companies do not like e-cig or vape cartridges and exclude coverage for these items. To make sure you are not paying for insurance that does not properly protect your business it is important to work with an experienced cannabis insurance agent that can help you understand the requirements and limits of your coverage.

Are there any special considerations that I should keep in mind when shopping for insurance for my licensed marijuana business?

Yes, for tax planning purposes, most cannabis businesses segment their operations into multiple business entities. How your business structure is built will determine where policy coverage is purchased. It is important that you work with an experienced agent who understands the industry to make sure your policy coverage effectively protects every segment of your marijuana business.

Can you elaborate on what you mean by business structure will dictate where coverage is purchased?

Because of the impact of section 280E of the US tax code, many cannabis business owners segment their business holding into individual business units for tax planning purposes. For instance, a marijuana dispensary licensee who also owns the building in which the dispensary operates would typically create two independent business enterprises, one for the real estate enterprise (landlord) and a second for the business entity that holds the marijuana license and runs the dispensary. In cases such as these, it often requires the purchase of two or more policies to properly protect the business owner. Failing to purchase policies in the correct business entity name could leave the building uninsured for a loss and/or put the marijuana licensee in violation of regulatory requirements.

What about crop insurance? Is there anything available in the market that could protect my business if there is a catastrophic loss of my crop?

Yes, there are insurance carriers and products in the market that provide coverage for your indoor or greenhouse crops if they are lost to fire, theft, or another qualifying event. However, it is not uncommon for us to suggest our clients consider business interruption coverage instead of crop coverage to enjoy a broader list of covered losses and more cost-effective policy options. Currently, there are not effective insurance products available to secure open-air outdoor growers.

Do I need business auto insurance if my employee drives their own car for work?

Businesses whose employees drive their own cars on the employer’s behalf should have non-owned auto coverage. We feel that the need for non-owned auto coverage exists for any type of business, but currently there is no Washington state requirement. It is however good to know that certain governmental entities might require you to carry non-owned auto insurance to work with them.

It is also important to keep in mind that as a business owner, you may be held legally liable for an accident caused by your employee who is driving on your behalf. The employee’s policy may pay to protect both the employee and the employer, but many employees have policies with very low limits (i.e. $25,000 per accident). Any amount of damages not paid by the employee’s policy may become the responsibility of the business owner. The insurance coverage that will cover the employer’s portion of a claim is called non-owned auto coverage. This insurance is readily available if employees drive their own cars on company business on an incidental basis—e.g., taking deposits to a bank, salespeople attending a business lunch, etc. If employees make multiple trips per week for the employer, like to deliver product or routinely pick-up supplies in their personal vehicle, non-owned auto coverage will be either very expensive or completely unavailable to purchase. At that point, you might find that your best option is to get official company vehicles and pay for commercial auto insurance.

We can help you figure out what options are best for you. Give us a call at 425-320-4280, and we will develop a plan and get you a free quote.

How do I get money to pay my bills after a claim?

Business income coverage pays for loss of income that the insured sustains due to a direct physical loss from a covered peril that forces the insured to suspend operations. The policy will pay (up to its limits) until the property can be repaired, rebuilt, or replaced with reasonable speed. The policy will pay lost profit plus fixed expenses—e.g., rent, salaries for key employees or owners, interest payment on debts, etc. This type of insurance is not a standard part of any property insurance policy and must be specifically requested. Some people like to think of business income coverage as disability insurance for a business.

Do I really need product liability insurance for my cannabis business?

The protection that product liability insurance provides includes not only payment for injuries your product may cause to a person, but it also includes payment for your defense costs. Product liability defense attorneys tend to charge $400+ per hour, and legal expenses can increase quickly. One of our clients located in the Pacific NW is involved in a lawsuit related to vaping products he sold. The case was filed 18 months ago, and defense costs are now over $100,000. No actual damages have been paid to the plaintiff, and our client expects to be dismissed from the litigation soon. Without product liability insurance, our client would be out of business, despite the fact that he has not been determined legally responsible for the plaintiff’s injuries. The legal fees would have buried him.
It is important to keep in mind that product liability cases typically involve everyone involved in the delivery of the cannabis product, including the producer, processor, marketing consultant, packaging designer, and retail store.

It is also important to know what is going on in the industry that is affecting other businesses like yours. Keeping in the loop can protect your business by helping you understand what claims you could also end up filing, what lawsuits could also be charged against you, and what coverage can protect you in certain scenarios. For instance, the first cannabis related product liability suit was recently filed in California. Here is a link to the specifics of the case.

What cannabis insurance is required for my state?

State insurance laws vary across all lines of business. When it comes to cannabis business insurance, there are very strict guidelines and penalties. Therefore, state requirements need even more observation to make sure that your cannabis company has the minimal required insurance in case of a claim or audit. That is where Mosaic Insurance Alliance comes in. Our team of professionals can discuss with you what you need for the state(s) that your store(s) and other business entities are located in.

Whether you are a cannabis wholesaler in California growing product for other businesses in your area, a cannabis vape shop in Washington selling to individuals in your community, a marijuana bud tender with stores in multiple states, a CBD topical lotions manufacturer in one state producing product for CBD shops in other states, or some other cannabis business, Mosaic can chat with you about your insurance needs for where your head office and store branches reside in. For example, as of January 2021, if you are in Washington, by law you have to have general and product liability insurance for your cannabis business. However, currently, if you are in Oregon or California, your cannabis company only has to have general liability insurance by law. What about the requirements for other states? We are happy to discuss your state insurance requirements with you. Give us a call at 425-320-4280 or email us at cannabis@mosaicia.com.

Also, it is good to keep in mind that just because your state requires only certain types of insurance, those requirements alone might not be enough coverage for the type of business you have. If you have a claim that needs more protection than the state minimum, you might find yourself paying out-of-pocket for certain claim types that are common for your line of business and the location you are in. We can help you determine what coverage you must have, as well as what additional coverage would create a nice safety net for the company that you have worked so hard to grow and keep in business. Call or email us for a free insurance quote! We look forward to helping you and we LOVE questions.

How do I pay my insurance bill?

You have different options available to you. First, you can go to your carrier’s website and electronically pay. Also, you can reach out to your carrier by phone. (Check out our cannabis carrier page for payment links and phone numbers to some of the top carriers we write with.)

Another way that you can pay your insurance bill is by calling up your Mosaic insurance agent and seeing if they can take the payment for you. If an instance occurs where your agent is not able to process the payment for you directly, they will warm transfer you to a Service Center billing department or walk you through how to pay online. Things can vary carrier to carrier, but your Mosaic agent will make sure that you get to where you need to be!

Do you sell commercial health insurance for cannabis businesses?

Currently, we do not sell health insurance. However, one of our cannabis independent insurance agents is happy to help get you get the contact information of someone who can better assist you.

Do you sell key person life insurance for cannabis businesses?

Yes. Give us a call and we will go over your options! We have helped other cannabis business owners get life insurance on themselves and their business partners in a buy-sell agreement, and/or for key individuals in their business.

Why are there less options for cannabis auto insurance and more for commercial auto insurance?

While the US has come a long way over the last decade or so, cannabis is still a “green” industry. Marijuana auto insurance, other cannabis coverages, and other business dynamics are still adapting and expanding in the cannabis community. These growing pains are evident no matter what state, carrier, or agency you look at. But rest assured that we stay on top of things here at Mosaic Insurance. As the marijuana industry gets more coverage options, we will make sure to do whatever we can to have access to those options for you immediately, whether it is for cannabis auto insurance or other cannabis insurance like property, liability, workers comp, etc. Give us a call today to see what the current options are, and, once you are our client, we can easily help you get any new updates whenever they are available.

Do you know the Washington State Liquor and Cannabis Board (WSLCB) insurance requirements?

We do keep up to date with the insurance requirements imposed by Washington state, however these items are often interpreted differently by different LCB inspectors. Generally speaking, both general insurance and product liability insurance are required by the WSLCB, but we encourage our clients to get a specific answer from their particular state inspector.

Do I need product liability insurance for my cannabis business?

In Washington state, it’s required for your license. In many other states, it’s advised to better protect yourself. Make sure that you know the requirements for your state. It is also important to keep in mind that wherever you are in the production process, you may be sued if someone gets hurt. We have seen claims where everyone from the grow operation to the retail shop is listed in a lawsuit.

Why does insurance premium keep going up, even when you have no losses?

Your insurance can increase due to factors other than you having a claim. Some common reasons include: tickets, inflation, claims of others in your area (risk factor), crime, labor cost increases, and cannabis state regulations.

Is coverage available for on-site consumption?

Yes! We have access to the most up-to-date carrier coverage forms, which now include coverage for on-site cannabis consumption! Give us a call at 425-320-4280 for a free quote today.

Can you get special event insurance for your cannabis business?

Yes! We can help you get coverage for your on-site and off-site events, whether you’re a marijuana vendor at a street fair, or you have a big work party, company anniversary celebration, or Black Friday type shindig. Call us at 425-320-4280.

How can you help prevent theft?

We’ve had a more and more commercial clients who have experienced theft and building damage over the years. Theft and vandalism is on a constant rise. In addition to having stable coverage, we advise that you have adequate antitheft protections in place.

For instance, we are seeing more cannabis commercial claims of thieves crashing their cars into store front windows to gain access. One of the big things shop owners are doing is installing concrete barriers in front of areas where a vehicle could smash through the building. We’re also seeing thieves steal ATMs a lot, so we advise better securing those also.

What is Retrospective Rating (RETRO)?

Retrospective Rating (RETRO) is a possible money-saving option. It is also now available for cannabis businesses in Washington state.

Retrospective Rating (RETRO) is a Department of Labor and Industries (L&I) partial refund rating program that Washington cannabis businesses can participate in. You can get rewarded with a premium refund for having a safe workplace. Contact L&I to learn more and to get the discount itself. (And, if you want to know about other possible discounts, ask Mosaic Insurance about possible discounts like security discounts.)

Why do Delta-8 products tend to be more expensive to insure?

Some products are just more expensive to insure. For Delta-8, products liability coverage is harder to get and more expensive than it is for “regular” CBD products.

Luckily, it’s starting to relax a little bit, but we’re still seeing stuff like Delta-8, Delta-9, HHC, etc. as a separate category from “traditional” CBD products that are considered fully non-psychoactive. Since we are an insurance broker, we can help you get stable coverage at competitive prices. Give us a call at 425-320-4280 or email us at cannabis@mosaicia.com . More about Delta-8 insurance: https://mosaicia.com/cannabis-insurance/delta-8-thc-insurance/

What is the difference between commercial auto liability and commercial general liability?

Commercial auto liability is separate from commercial general liability. Auto liability is not included with commercial liability coverage. Most commercial general liability policies specifically exclude coverage for bodily injury or property damage arising out of any motor vehicle use.

One way to remember the differences is general liability is premises and/or product coverage, and auto liability provides coverage for any actual vehicle use.

Why is the renewal for my building insurance more expensive when my property is a year older?

With the spike in inflation over the past 3 years, the cost of both construction materials and labor have spiked as well. Older buildings need more repairs and maintenance to keep up-to-code, and they tend to have hefty repair costs after they’re damaged. As your building gets older, you might see an increase in your commercial insurance both because of inflation and age. Luckily, we are an insurance broker who writes with leading carriers in the country. We also have team who always stays in the loop with business insurance discounts. Call us at 425-320-4280 or email us at cannabis@mosaicia.com today.

What is the difference between commercial auto liability and commercial general liability?

Commercial auto liability is separate from commercial general liability.

Auto liability is not included with commercial liability coverage. Most commercial general liability policies specifically exclude coverage for bodily injury or property damage arising out of any motor vehicle use.

One way to remember the differences is general liability is premises and/or product coverage, and auto liability provides coverage for any actual vehicle use.

Unfortunately, clients often mix these two liability coverages up. Luckily, coverage counseling is what an independent insurance agent is for! Call us today at 425-320-4280 to get your very own agent who will help you cover your company coverage bases.

Is cyber liability insurance mainly for the BIG companies?

You might think that your company is too small to be targeted by a cyber criminal…We say, think again and then call us at 425-320-4280! You can also learn more about cyber insurance here.

Cyber liability insurance is not just for the BIG companies. For instance, Mosaic Insurance recommends that all retail businesses have cyber liability insurance, even the smaller stores. Over 50% of cyber attacks occur on businesses with less than 100 employees. Give us a call now so you can focus on customers.

Cannabis Insurance FAQs - View of Scientists Examining and Taking Notes on the Health of Cannabis Plants in a Production Facility