Cannabis Insurance
in Florida
Medical cannabis is the law to the current date. Marijuana is only legal in Florida when a person has obtained Medical Marijuana Use Authorization. Cannabis insurance works to mitigate these risks, enabling companies to stay on the path to profitability.
Understanding the Florida Cannabis Industry
Florida’s cannabis industry is the third largest in the country, behind California and Colorado, and is poised to grow in the upcoming years. The state only allows for the use of marijuana for medical purposes, and the recreational use of cannabis is still illegal.
The cannabis industry in Florida is growing steadily, and the state is now looking to issue more licenses to cannabis businesses that want to establish themselves in the growing market.
Campaigns for the legalization of recreational cannabis are also underway, and if successful, the state’s cannabis industry is expected to boom.
Overview of Florida's Cannabis Market
Despite only having medical marijuana legalized, Florida’s cannabis industry is the 3rd largest cannabis industry and the largest medical-only cannabis market in the US, worth around $1.5 billion.
It’s projected to grow to $2.5 billion by 2025. Florida has over 779,465 active medical cannabis patients, a number that has grown by over 70% since 2020,
Florida’s cannabis industry is regulated heavily by the state, with only 22 licensed cannabis providers that can legally operate in the state. Since the number of licenses is limited, a new provider can only acquire a license by buying it from an old authorized business and some of these licenses have been sold for well over $50 million.
Florida announced the issuance of new Cannabis Licenses at the end of 2022, with 22 new licenses being available for cannabis businesses in the state. This offers a great opportunity for any entrepreneur or investor that wants to establish a marijuana business in the state.
Florida Cannabis Laws and Regulations
Florida is one of 38 US States that allow for the use of medical marijuana. However, the use of recreational cannabis is still illegal and is subject to penalties depending on the amount possessed.
The Sunshine State first legalized the medical use of marijuana in 2014 under the Compassionate Medical Cannabis Act. This act allowed for the use of a specific strain of cannabis in the form of cannabis oil with low THC and high CBD for the treatment of patients with epilepsy, cancer, and amyotrophic lateral sclerosis (ALS).
Advocates then pushed for the state government to reduce the restrictions under the 2014 act. In 2016, Florida legalized the complete use of medical marijuana under the Florida Medical Marijuana Legalization Initiative after over 70% of voters voted in favor of the act.
Under the 2016 act, Floridians can only use and possess marijuana if they have a Medical Marijuana Use Authorization certificate from a qualified physician. However, possession of marijuana without a medical certificate qualifies as a criminal offense and is persecuted by law.
Penalties for possession of marijuana without a license vary depending on the amount. Possession of fewer than 20g is considered a misdemeanor and is punishable by up to one year in prison or a maximum fine of $1000.
Possession of more than 20g is considered a felony and can result in probation, a significant prison sentence, and fines, depending on the amount carried. However, many counties in Florida have decriminalized the possession of small amounts of marijuana (less than 20 grams), with only small fines imposed or cite and release orders given.
Advocates are working to legalize the recreational use of marijuana in Florida by the 2024 ballots.
Risks Faced by Cannabis Businesses in Florida
Cannabis Businesses in Florida face several risks due to the nature of the cannabis industry. Marijuana Dispensaries face security risks and product liability risks that can severely affect the business.
Moreover, with the strict laws and regulations concerning the possession of sale of marijuana in Florida, businesses may face legal risks regarding licenses which are very hard to obtain, sale to unauthorized customers, and legal action if the cannabis content sold does not match state regulations.
Moreover, since the cannabis laws in Florida can change depending on the county or city, with many cities banning or decriminalizing marijuana, cannabis businesses can risk non-compliance with state and city laws if they are unaware of any changes.
Despite only having medical marijuana legalized, Florida’s cannabis industry is the 3rd largest cannabis industry and the largest medical-only cannabis market in the US, worth around $1.5 billion.
It’s projected to grow to $2.5 billion by 2025. Florida has over 779,465 active medical cannabis patients, a number that has grown by over 70% since 2020,
Florida’s cannabis industry is regulated heavily by the state, with only 22 licensed cannabis providers that can legally operate in the state. Since the number of licenses is limited, a new provider can only acquire a license by buying it from an old authorized business and some of these licenses have been sold for well over $50 million.
Florida announced the issuance of new Cannabis Licenses at the end of 2022, with 22 new licenses being available for cannabis businesses in the state. This offers a great opportunity for any entrepreneur or investor that wants to establish a marijuana business in the state.
Florida is one of 38 US States that allow for the use of medical marijuana. However, the use of recreational cannabis is still illegal and is subject to penalties depending on the amount possessed.
The Sunshine State first legalized the medical use of marijuana in 2014 under the Compassionate Medical Cannabis Act. This act allowed for the use of a specific strain of cannabis in the form of cannabis oil with low THC and high CBD for the treatment of patients with epilepsy, cancer, and amyotrophic lateral sclerosis (ALS).
Advocates then pushed for the state government to reduce the restrictions under the 2014 act. In 2016, Florida legalized the complete use of medical marijuana under the Florida Medical Marijuana Legalization Initiative after over 70% of voters voted in favor of the act.
Under the 2016 act, Floridians can only use and possess marijuana if they have a Medical Marijuana Use Authorization certificate from a qualified physician. However, possession of marijuana without a medical certificate qualifies as a criminal offense and is persecuted by law.
Penalties for possession of marijuana without a license vary depending on the amount. Possession of fewer than 20g is considered a misdemeanor and is punishable by up to one year in prison or a maximum fine of $1000.
Possession of more than 20g is considered a felony and can result in probation, a significant prison sentence, and fines, depending on the amount carried. However, many counties in Florida have decriminalized the possession of small amounts of marijuana (less than 20 grams), with only small fines imposed or cite and release orders given.
Advocates are working to legalize the recreational use of marijuana in Florida by the 2024 ballots.
Cannabis Businesses in Florida face several risks due to the nature of the cannabis industry. Marijuana Dispensaries face security risks and product liability risks that can severely affect the business.
Moreover, with the strict laws and regulations concerning the possession of sale of marijuana in Florida, businesses may face legal risks regarding licenses which are very hard to obtain, sale to unauthorized customers, and legal action if the cannabis content sold does not match state regulations.
Moreover, since the cannabis laws in Florida can change depending on the county or city, with many cities banning or decriminalizing marijuana, cannabis businesses can risk non-compliance with state and city laws if they are unaware of any changes.
Types of Cannabis Insurance Coverage in Florida
There is a wide variety of plans to choose from when it comes to you and your business. Some of these include:
Dispensary Insurance
Several risks specific to cannabis dispensaries can significantly affect the operations, due to which the state may require you to get comprehensive insurance coverage before issuing you a valid cannabis dispensary license.
Product Liability Insurance
Cannabis companies that offer 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 Insurance
Property Insurance is a first-party insurance policy, reimbursing cannabis companies for direct property loss (i.e., vandalism, fire, or natural disaster). This policy covers real property, business personal property, and cannabis inventory.
D&O Insurance
Shareholders, competitors, investors, etc., can sue a cannabis 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.
Workers’ Compensation Insurance
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
Several risks specific to cannabis dispensaries can significantly affect the operations, due to which the state may require you to get comprehensive insurance coverage before issuing you a valid cannabis dispensary license.
Cannabis companies that offer 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 Insurance is a first-party insurance policy, reimbursing cannabis companies for direct property loss (i.e., vandalism, fire, or natural disaster). This policy covers real property, business personal property, and cannabis inventory.
Shareholders, competitors, investors, etc., can sue a cannabis 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.
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
Choosing the Right Cannabis Insurance Policy in Florida
Unlike other industries, cannabis must navigate regulatory uncertainty across local, state, and federal agencies. The overwhelming concern of weather issues destroys crops or products. Even if it is just general liabilities for the business, navigating these industries is our specialty.
Working with an Experienced Cannabis Insurance Broker
AlphaRoot
AlphaRoot is a full-service insurance brokerage that focuses exclusively in the cannabis, hemp, CBD, holistic medicine, and psychedelic industries. We work with companies across the entire supply chain, from seed to sale, as well as ancillary and capital providers. Our team is heavily invested in these industries, and our goal is to help companies scale to propel them forward.
Factors to Consider When Choosing Cannabis Insurance
An insurance broker is responsible for different tasks. Hiring the wrong cannabis insurance broker will waste both your time and money. The right cannabis insurance broker will understand your values and bring the right solution to you. When looking for a reliable broker, there are some essential things to consider.
- Familiarity with this fluctuating cannabis industry.
- Do they offer risk management resources?
- Know their broker expertise.
- How many insurance carriers do they carry
- Can the broker analyze your contracts and advise you?
- You can add or ask for other things depending on your business’s status.
Common Mistakes to Avoid When Buying Cannabis Insurance
They don't purchase insurance at all
One of the biggest mistakes cannabis business owners are making is not having a policy at all. While the wrong policy is problematic, not having any coverage can be devastating to a new or even an established business. Investing in insurance covers the unforeseen and mitigates risk.
They don’t purchase cannabis specific insurance
Cannabis insurance is a very specialized niche in the insurance industry. Not all insurance agents/brokers have specific knowledge about the risks in the cannabis industry. Insuring cannabis is not like insuring your house or automobile strictly because of the nature of what you’re trying to insure and how it’s viewed by the government. If you don’t have a policy that is specific to cannabis, there may be certain exclusions based on the Schedule I status of cannabis or illegal substances.
They don’t work closely enough with a cannabis insurance specialist
Working closely with someone that knows the cannabis insurance industry is critical when choosing a policy. Cannabis business owners have to ask their agents/brokers questions, lots of questions and the broker/agent needs to be able to answer those questions.
Cultivators fail to buy crop insurance
If you are a cultivator or a grower, you rely on your cannabis crop for your income. Cannabis is agriculture, just like corn, wheat, or soy. Cultivators have to protect their income; therefore, they must have cannabis insurance and, specifically, crop insurance. Every year, wildfires ravage thousands of acres of land and crops, resulting in millions of dollars of losses for cultivators.
They don’t know what's included in their policy
As a cannabis business owner, knowledge is power. You have to be aware of the changing laws at the federal, state, and local level. You also need to know your business inside and out. Part of knowing your business is understanding what is and is not in your insurance policy. You have to know what is covered and what is excluded. There are many cannabis specific exclusions that are often overlooked. https://www.s2sinsure.com/post/cannabis-insurance-top-5-mistakes-to-avoid
Benefits of Cannabis Insurance for Florida Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Florida, not to mention across the entire US.
AlphaRoot is not in the insurance business. We’re in the business of guiding cannabis companies through the unique risks of our industry. It’s why we don’t merely broker insurance, we curate powerful cannabis risk management solutions.
Insurers looking to provide commercial cannabis insurance to this budding market should understand its rapidly shifting landscape. They must contend with legal uncertainty, evolving regulations, lack of data, and developing business practices. Insurers will also need to understand how the cannabis industry’s first and third‐party coverage needs are unique from other industries.
Cannabis businesses are required by law to have business insurance in Florida. The minimum insurance requirement is a $5 million performance bond or $2 million performance bond for medical marijuana treatment centers that serve at least 1,000 patients.
- MSO’s
- Dispensaries
- Lab Testing
- Cultivation
- Investment Funds
- Manufacturing
- Distribution
- Technology
- Psychedelics
- Brands Service
- Providers
Cannabis Businesses
That May Need Insurance
Getting a Quote for Cannabis Insurance in Florida
Cannabis Insurance in Florida
Frequently Asked Questions
Cannabis insurance coverage can depend on what your business requirements are as well as the insurance requirements of each state. In general, cannabis insurance will cover general liability, product liability, property liability, theft, cybercrime, and compensation for employees.
There isn’t a fixed cost for cannabis insurance, as the amount varies depending on the policy you choose and the amount of coverage you opt for.
Your expenses can range anywhere from a few hundred dollars to thousands of dollars depending on the size and scale of your operations and your insurance plan. Cannabis insurance can also be priced higher than other businesses due to the inherent risks associated with the cannabis industry.
Cannabis insurance is required by law in Florida. Cannabis businesses must have $5 million in performance bonds or $2 million in performance bonds for medical marijuana treatment centers that serve at least 1,000 patients.
You can file a cannabis claim like any other insurance claim. You need to contact your cannabis insurance provider to report a claim. Your claim will then be filed and validated depending on the proof you have regarding the incident.
It’s always necessary to check out your insurance coverage policy to see if the claim is covered by your insurance company.