What calibrated coverage for cannabis looks like for MSO’s.
Multi-state operators (MSO) represent a single brand while evolving across state lines and into other verticals. Whether through investment or M&A activity, MSOs are growing rapidly, despite the slow pace of federal legislation. As imagined, operating in several states while maintaining legal compliance is the primary risk MSOs currently face.
A license to succeed.
State lines. Lines of business. Calibrated coverage means lines of insurance that fit your growth plan.
One of the biggest issues MSO’s face is the multitude of state and local regulations they must navigate in order to operate in each of their various locations. Each state and municipality has its own laws as it relates to the growing, selling, and distribution of cannabis products which can create an operational nightmare for companies. These operational challenges can lead to infractions which may result in insurance-related claims
Many farmhands or workers operate heavy machinery. Unfortunately, if an employee gets ill or hurt on the job, the cultivator is typically held responsible for medical costs and lost wages.
Multi-state operators often use equipment that is expensive to replace or repair. And this equipment is generally stored inside secure buildings. Without adequate protection, damage to equipment or buildings could add up to out-of-pocket costs.
Multistate Operators face legal liability arising from others using the product (flower). Even if it’s not your brand, you may face a lawsuit should someone get hurt or sick from the use of your product.
A license to succeed.
State lines. Lines of business. Calibrated coverage means lines of insurance that fit your growth plan.
One of the biggest issues MSO’s face is the multitude of state and local regulations they must navigate in order to operate in each of their various locations. Each state and municipality has its own laws as it relates to the growing, selling, and distribution of cannabis products which can create an operational nightmare for companies. These operational challenges can lead to infractions which may result in insurance-related claims
Many farmhands or workers operate heavy machinery. Unfortunately, if an employee gets ill or hurt on the job, the cultivator is typically held responsible for medical costs and lost wages.
Multi-state operators often use equipment that is expensive to replace or repair. And this equipment is generally stored inside secure buildings. Without adequate protection, damage to equipment or buildings could add up to out-of-pocket costs.
Multistate Operators face legal liability arising from others using the product (flower). Even if it’s not your brand, you may face a lawsuit should someone get hurt or sick from the use of your product.
Testimonials
Core Coverage
Directors & Officers
Shareholders, competitors, investors, etc., can sue A MSO’s company’s executives, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.
General Liability
General liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.
Product Liability
Cannabis companies offering tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Products liability insurance covers defense fees and settlements, even for ungrounded claims. This coverage is particularly critical in the cannabis space as testing and manufacturing aren’t regulated at the federal level.
Property
This policy is first-party coverage that protects the Total Insurable Value (TIV) of your operation’s property, reimbursing cannabis companies for direct property losses.
Crime
Whether employees steal from you, a thief robs your armored car, or you receive a forged check or fraudulent wire transaction, money theft happens in many ways. Crime insurance guards your cannabis company against damages from these particular crimes.
Cyber Liability
Cyber insurance protects companies from third-party lawsuits relating to electronic activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.
Bond
This coverage protects scheduled payment of interest and principal. Many local ordinances require MSOs to secure bonds, and AlphaRoot has the ability to service these bonds.
Employment Practices Liability
Cannabis companies with any number of employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects cannabis companies against lawsuits related to employment practices.
Workers' Compensation
Employers are typically responsible for their medical costs and lost wages when employees sustain work-related injuries. This policy covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly.
Directors & Officers
Shareholders, competitors, investors, etc., can sue A MSO’s company’s executives, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.
General Liability
General liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.
Product Liability
Cannabis companies offering tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Products liability insurance covers defense fees and settlements, even for ungrounded claims. This coverage is particularly critical in the cannabis space as testing and manufacturing aren’t regulated at the federal level.
Property
This policy is first-party coverage that protects the Total Insurable Value (TIV) of your operation’s property, reimbursing cannabis companies for direct property losses.
Crime
Whether employees steal from you, a thief robs your armored car, or you receive a forged check or fraudulent wire transaction, money theft happens in many ways. Crime insurance guards your cannabis company against damages from these particular crimes.
Cyber Liability
Cyber insurance protects companies from third-party lawsuits relating to electronic activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.
Bond
This coverage protects scheduled payment of interest and principal. Many local ordinances require MSOs to secure bonds, and AlphaRoot has the ability to service these bonds.
Employment Practices Liability
Cannabis companies with any number of employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects cannabis companies against lawsuits related to employment practices.
Workers' Compensation
Employers are typically responsible for their medical costs and lost wages when employees sustain work-related injuries. This policy covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly.
MSO Specific
Coverage
Professional liability, also known as errors and omissions (E&O) insurance, covers companies in third-party or client lawsuits claiming substandard work or service. Work errors or oversights, missed deadlines, budget overruns, etc., often result in costly cases — but professional liability insurance responds to these mishaps.
As a type of Property coverage, Crop Insurance covers loss of crop due to a physical loss by a covered peril. For example, consider a fire in the cultivation facility and the damage it would cause the MSO’s facilities itself and the crops.
Owned auto insurance provides first-party property damage coverage for your vehicle and bodily injury coverage to uninsured or underinsured motorists. HNOA includes coverage for third-party property damage and bodily insuring resulting from accidents during your business.
For large MSO’s the primary limits of General Liability and Product Liability are likely to not offer sufficient coverage in the event of a loss. As such, we’d recommend Excess Liability coverage to offer additional protection, as well as risk transfer and compliance.
Most property policies limit the coverage territory to just 100 ft. off of the designated premises. However, a Property-In-Transit enhancement will offer coverage for property being transported.
Professional Liability
Professional liability, also known as errors and omissions (E&O) insurance, covers companies in third-party or client lawsuits claiming substandard work or service. Work errors or oversights, missed deadlines, budget overruns, etc., often result in costly cases — but professional liability insurance responds to these mishaps.
Crop Coverage
As a type of Property coverage, Crop Insurance covers loss of crop due to a physical loss by a covered peril. For example, consider a fire in the cultivation facility and the damage it would cause the MSO’s facilities itself and the crops.
Auto Liability
Owned auto insurance provides first-party property damage coverage for your vehicle and bodily injury coverage to uninsured or underinsured motorists. HNOA includes coverage for third-party property damage and bodily insuring resulting from accidents during your business.
Excess Liability
For large MSO’s the primary limits of General Liability and Product Liability are likely to not offer sufficient coverage in the event of a loss. As such, we’d recommend Excess Liability coverage to offer additional protection, as well as risk transfer and compliance.
Property-in-Transit
Most property policies limit the coverage territory to just 100 ft. off of the designated premises. However, a Property-In-Transit enhancement will offer coverage for property being transported.
Types of MSO's Companies
That Need Insurance
- Extractors
- Grow Operations
- Laboratories
- Transporters
- Dispensaries
- Professional Services
- Manufacturers
- Distributors
- Brands
- Technology
- Investors
Extractors
These facilities use sophisticated techniques to isolate specific plant compounds (i.e., CBD, THC, etc.)
Grow Operations
These cultivators grow various cannabis plants, intending to harvest the flowers for product use.
Laboratories
Research and development spurs discovery forward in labs focused on cannabis extraction, distillation, and purification.
Transporters
Pickup and delivery services provide speedy and efficient logistics support for cannabis brands nationwide.
Dispensaries
Since regulators legalized recreational use, the storefront has been the traditional means of reaching consumers.
Professional Services
These companies provide many services, including consulting, marketing, developing, processing, advising, managing, reporting, etc.
Manufacturers
These “plant-touching” operations transform the pure crop into a consumable alternative through labor-intensive processes.
Distributors
Cannabis distribution companies play the unique role of “middleman,” delivering products from growers to business consumers, such as brands or dispensaries.
Brands
Cannabis brands come in various shapes and sizes, from celebrities branding their own cannabis product line to emerging companies trying to elevate their consumer’s experience.
Technology
Tech companies offer the cannabis industry many solutions, including inventory management systems, temperature control systems, online purchasing systems, education platforms, etc.
Investors
Venture capital and private equity firms invest and provide funds to businesses with a high potential for long-term growth.
Read Our Guide
Learn about, common risks in the Cannabis space and how to mitigate them, including licensing, compliance, funding and insurance strategy.
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FAQ's
More often than not, the premium is a function of company revenue. Changes in revenue will often be the driving factor for increase or decreases in cost on renewal.
How carriers determine premium depends entirely on the industry, for example:
- Tech E&O policies may look at revenue in conjunction with monthly average users.
- Allied health/malpractice premiums will be guided by the number of covered care providers.
- A tour guide’s E&O policy may be rated on “hours”: hours per tour x number of customers per tour x number of tours per year.
Many other variables impact the cost of this coverage, such as:
- Location
- Claims history
- Policy limits
