Status: Fully Legal

Cannabis Insurance
in Delaware

Delaware’s cannabis market has evolved over the years, particularly with the legalization of recreational cannabis in 2023. The state has developed a regulatory framework to oversee the market, ensuring compliance and safety.

Recreational
No Cannabis Program
Medical Only
Updated 11.10.2024

Introduction to Cannabis Insurance in Delaware

Delaware’s cannabis industry is regulated under the Delaware Medical Marijuana Act, allowing for the cultivation, processing, and dispensing of medical cannabis to registered patients. The state has a limited number of licensed dispensaries and cultivators, with strict regulations governing licensing, production, and distribution.

Overview of Delaware's Cannabis Industry

Delaware’s cannabis industry is regulated under the Delaware Medical Marijuana Act, allowing for the cultivation, processing, and dispensing of medical cannabis to registered patients. The state has a limited number of licensed dispensaries and cultivators, with strict regulations governing licensing, production, and distribution.

Delaware Cannabis Laws and Regulations

Delaware has comprehensive cannabis laws that regulate both medical and recreational use. Here’s the updated overview:

Medical Cannabis

Delaware’s medical cannabis program allows patients with qualifying medical conditions to access marijuana for therapeutic purposes. The program is overseen by the Delaware Department of Health and Social Services (DHSS).

  • Qualifying Conditions: Patients must have a debilitating medical condition such as cancer, HIV/AIDS, multiple sclerosis, severe pain, intractable nausea, PTSD, or other conditions approved by the DHSS.
  • Registration: Patients and caregivers must register with the DHSS and obtain a medical marijuana card. Caregivers can assist up to five patients.
  • Possession Limits: Registered patients can possess up to 6 ounces (170 grams) of usable marijuana within a 30-day period. Home cultivation is not permitted.

Compassion Centers and Cultivation Facilities:

  • Licensing: Compassion centers (dispensaries) and cultivation facilities must obtain licenses from the DHSS. The licensing process includes background checks and compliance with zoning laws.
  • Operations: Compassion centers are authorized to cultivate, process, and dispense medical marijuana to registered patients and caregivers. They must adhere to strict security, quality control, and record-keeping guidelines.
  • Product Testing: All medical marijuana products must be tested for contaminants and potency to ensure safety and accurate labeling.

Recreational Cannabis

Delaware legalized recreational cannabis in April 2023, allowing adults aged 21 and over to legally possess, purchase, and use cannabis.

  • Possession Limits: Adults can possess up to 1 ounce (28 grams) of cannabis and up to 6 grams of cannabis concentrate. Home cultivation is permitted, with a limit of 6 plants per person and 12 plants per household.
  • Sales and Distribution: Recreational cannabis sales are regulated and can only occur through state-licensed dispensaries. Dispensaries are being established as part of the state’s regulatory framework for commercial sales.

Prohibited Activities

Certain activities are prohibited and can result in legal penalties:

  • Driving Under the Influence: Driving while impaired by cannabis is illegal.
  • Selling to Minors: It is illegal to sell cannabis to individuals under 21.
  • Operating Without a License: Engaging in cannabis-related activities without proper licensing is prohibited.

Understanding the Importance of Insurance for Cannabis Businesses

Insurance is crucial for Delaware’s cannabis businesses to mitigate risks associated with legal liabilities, property damage, and regulatory compliance. Comprehensive insurance coverage provides financial protection against lawsuits, crop loss, and business interruptions, ensuring the sustainability and resilience of cannabis operations in Delaware both for medicinal or recreational use.

Comprehensive Coverage: Types of Cannabis Business Insurance Available 

General liability insurance protects cannabis businesses in Delaware against third-party claims for bodily injury, property damage, and advertising injury. It covers legal expenses, medical costs, and settlement fees arising from accidents or negligence on the business premises or as a result of products sold.

General Liability Insurance

Cannabis crop insurance provides coverage for losses due to perils such as fire, theft, vandalism, and natural disasters. It reimburses growers for the value of damaged or destroyed crops, ensuring financial recovery and continuity of cultivation operations. Outdoor crops are more exposed to emerging risks from natural threats.

Cultivation Insurance

Product liability insurance protects cannabis businesses from claims arising from defective cannabis products that cause harm or injury to consumers. It covers legal expenses, medical costs, and compensation for damages resulting from product defects or contamination. Dispensaries should have product liability coverage as it protects them from paying huge amounts of money to customers that are claiming to be harmed by a product from their store.

Product Liability Insurance

Property insurance covers the physical assets of cannabis businesses, including buildings, equipment, and inventory, against damage or loss caused by fire, theft, vandalism, or other covered perils. It provides financial reimbursement for repair or replacement costs, minimizing disruption to operations.

Property Insurance

Directors & Officers (D&O) insurance protects the personal assets of company executives and board members from lawsuits alleging wrongful acts or mismanagement. It covers legal expenses and settlements related to regulatory violations, negligence, or breach of fiduciary duty.

D&O Insurance

Workers’ compensation insurance is mandatory for cannabis businesses in Delaware and covers medical expenses and lost wages for employees injured on the job. It ensures compliance with labor laws and provides financial protection for both employees and employers. This should always be a part of your employee benefits.

Workers Comp Insurance

Business interruption insurance compensates cannabis businesses for lost income and operating expenses when operations are temporarily suspended due to covered events such as fire, natural disasters, or government-mandated closures. It helps maintain financial stability and facilitates the resumption of operations.

General liability insurance protects cannabis businesses in Delaware against third-party claims for bodily injury, property damage, and advertising injury. It covers legal expenses, medical costs, and settlement fees arising from accidents or negligence on the business premises or as a result of products sold.

General Liability Insurance

Cannabis crop insurance provides coverage for losses due to perils such as fire, theft, vandalism, and natural disasters. It reimburses growers for the value of damaged or destroyed crops, ensuring financial recovery and continuity of cultivation operations. Outdoor crops are more exposed to emerging risks from natural threats.

Cultivation Insurance

Product liability insurance protects cannabis businesses from claims arising from defective cannabis products that cause harm or injury to consumers. It covers legal expenses, medical costs, and compensation for damages resulting from product defects or contamination. Dispensaries should have product liability coverage as it protects them from paying huge amounts of money to customers that are claiming to be harmed by a product from their store.

Product Liability Insurance

Property insurance covers the physical assets of cannabis businesses, including buildings, equipment, and inventory, against damage or loss caused by fire, theft, vandalism, or other covered perils. It provides financial reimbursement for repair or replacement costs, minimizing disruption to operations.

Property Insurance

Directors & Officers (D&O) insurance protects the personal assets of company executives and board members from lawsuits alleging wrongful acts or mismanagement. It covers legal expenses and settlements related to regulatory violations, negligence, or breach of fiduciary duty.

D&O Insurance

Workers’ compensation insurance is mandatory for cannabis businesses in Delaware and covers medical expenses and lost wages for employees injured on the job. It ensures compliance with labor laws and provides financial protection for both employees and employers. This should always be a part of your employee benefits.

Workers Comp Insurance

Business interruption insurance compensates cannabis businesses for lost income and operating expenses when operations are temporarily suspended due to covered events such as fire, natural disasters, or government-mandated closures. It helps maintain financial stability and facilitates the resumption of operations.

Top-Rated Insurance Services

Your Cannabis Business Deserves the Best

Ensure the longevity of your cannabis business with AlphaRoot's top-rated insurance services. Our comprehensive coverage options are tailored to meet your specific needs.

Expert Advice: Choosing the Right Cannabis Insurance Policy 

How to Evaluate Your Insurance Needs

Assess your business’s specific risks, including regulatory compliance, property damage, and liability exposure. Consider factors such as the size of your operation, the nature of your products, and your location to determine the appropriate coverage limits and policy features. Get a quote from AlphaRoot to get the right coverage!

cannabis business
Cannabis insurance needs

Factors to Consider When Choosing a Cannabis Insurance

Consider the reputation and expertise of insurance providers, the scope and limits of coverage, policy exclusions, and premium costs. Evaluate the insurer’s experience in the cannabis industry and their ability to tailor coverage to meet your business’s unique needs and compliance requirements.

Benefits of Having the Right Cannabis Insurance

Having the right cannabis insurance safeguards your investments by protecting assets and investments in facilities, equipment, and inventory from unexpected losses or damages. It ensures compliance with state laws and regulations governing insurance requirements for cannabis businesses in Delaware, facilitating uninterrupted operations by providing financial support during disruptions or emergencies. Additionally, it covers legal expenses and settlement costs in case of lawsuits or regulatory actions and ensures employee welfare and compliance with labor laws, thereby reducing financial liabilities for workplace injuries.

Consulting with Cannabis Insurance Specialists

Cannabis insurance specialists assess your business’s unique risks, including regulatory compliance, product liability, and crop loss, to tailor insurance solutions to your needs. They guide you through the complexities of insurance policies, explaining coverage options, exclusions, and limitations to help you make informed decisions aligned with your business goals and risk tolerance.

By recommending appropriate coverage limits and policy features, these specialists help mitigate financial losses, ensuring financial resilience and stability for your cannabis business in Delaware. Additionally, they ensure your insurance policies comply with state regulations and licensing requirements, helping you avoid fines, penalties, and regulatory issues that could jeopardize your operation’s success and legality.

Cannabis Insurance FAQs

All types of cannabis businesses in Delaware, including cultivators, retailers, manufacturers, and distributors, need insurance to protect against industry-specific risks, comply with regulations, and ensure business continuity.

Cannabis liability coverage is essential to protect your business from third-party claims related to bodily injury, property damage, and product-related issues. This coverage can help cover legal fees and settlements, safeguarding your business from significant financial loss. Few examples of cannabis coverages are; product liability coverage, cyber liability insurance, professional liability, employment practices liability insurance, and commercial auto insurance.

To reduce insurance premiums, implement risk management practices, invest in security measures, maintain a clean claims history, and work with an experienced insurance broker who can negotiate better rates and coverage terms.

If your cannabis insurance claim is denied, review the denial letter, gather supporting documentation, and contact your insurance provider for clarification. Consider working with a lawyer or insurance specialist to appeal the decision.

Changes in regulations can impact cannabis insurance by altering compliance requirements, coverage needs, and risk assessments. Stay informed about regulatory updates and consult with insurance specialists to ensure your coverage remains adequate and compliant.

Speak to a Cannabis Insurance Advisor

For comprehensive cannabis insurance solutions tailored to your business needs in Delaware, contact us today. Our experienced team of insurance professionals understands the unique risks and regulatory requirements of the cannabis industry.