Cannabis Insurance
in Wisconsin
Industry hemp is legal in Wisconsin, but recreational and medical cannabis is illegal. We offer a variety of insurance for growers to cultivations to discrepancies to help control the risk and protect the business long term.
Understanding the Wisconsin Cannabis Industry
Despite an increasing number of states legalizing the use of marijuana, Wisconsin remains strictly anti-cannabis. Currently, the state is one of only 11 states that doesn’t have an established medical cannabis program for its residents.
Both medical and recreational marijuana are illegal in Wisconsin, with the exception of low-potency CBD oils that can be used only for medical reasons. However, cannabis alternatives such as hemp are used widely to deliver the same “high” that can be found in marijuana.
In 2023, the Governor of Wisconsin included marijuana legalization in his budget request, signaling the state’s interest in finally legalizing cannabis both medical and recreational cannabis for its residents.
Overview of Wisconsin's Cannabis Market
Due to the illegal nature of cannabis in Wisconsin, there’s no official data regarding how much the state’s cannabis market is currently worth.
Wisconsin is poised to be an island of prohibition surrounding a sea of marijuana, as all neighboring states have legalized the use of cannabis either fully or medically and have experienced massive growth in the industry.
The cannabis industry in the neighboring state of Illinois reached $1.6 Billion in adult-use sales in 2022. Similarly, Michigan’s cannabis industry has become an absolute powerhouse, with sales at a whopping $2.3 Billion in 2022.
New polls in Wisconsin suggest that around 69% of registered voters believe that marijuana should be legal. However, despite this large support for marijuana, the state has failed to pass laws legalizing the possession, distribution, and cultivation of cannabis.
The US Cannabis industry is expected to cross $71 Billion by 2030. Legalizing the possession and sale of cannabis in Wisconsin will allow the state, it’s residents, and its economy to take part in the billion-dollar industry.
Wisconsin Cannabis Laws and Regulations
Despite repeated attempts to introduce new legislature legalizing the medical and/or recreational use of cannabis, marijuana remains illegal in the state of Wisconsin.
Using marijuana recreationally is completely prohibited, whereas medical use is limited to low-THC cannabis oil (CBD Oil).
Wisconsin legalized the use of CBD Oil to treat certain medical conditions in 2014. However, the regulations were very strict and access was limited.
In 2017, the state passed another bill relaxing the rules for the possession and distribution of CBD Oil which makes it easier for qualifying patients to access the drug and use it.
At the local level, numerous municipalities and counties, including Maddison and Milwaukee, have decriminalized or eased the regulations regarding the possession of marijuana.
At the state level, however, possession of marijuana after the first offense is considered a felony and is punishable by prison time as well as hefty fines. The sale and cultivation of any amount of cannabis is also considered a felony and has harsh penalties.
Risks Faced by Cannabis Businesses in Wisconsin
Despite cannabis being currently illegal, there is a growing possibility of legalization in the next couple of years. When medical or recreational cannabis is finally legalized in Wisconsin, businesses will be vulnerable to risks and problems that may harm their profitability,
The controversial nature of cannabis and its high demand in the market can leave cannabis businesses vulnerable to security and liability risks. Post-legalization, businesses in Wisconsin will have to worry about theft, safety, and the liabilities associated with running a cannabis business.
Due to the inconsistencies between federal and state law, there are different regulations throughout the US regarding cannabis use. This can create uncertainty for cannabis businesses as they navigate between a sea of conflicting laws.
Moreover, cannabis regulations are subject to change and businesses face the risk of non-compliance if they don’t operate within their state and their city’s legislature.
Various cities in one state may have different laws concerning the criminalization of marijuana, further increasing the risk of legal action incase of non-compliance. This makes it even more important to stay up-to-date with the state’s laws regarding cannabis.
Due to the illegal nature of cannabis in Wisconsin, there’s no official data regarding how much the state’s cannabis market is currently worth.
Wisconsin is poised to be an island of prohibition surrounding a sea of marijuana, as all neighboring states have legalized the use of cannabis either fully or medically and have experienced massive growth in the industry.
The cannabis industry in the neighboring state of Illinois reached $1.6 Billion in adult-use sales in 2022. Similarly, Michigan’s cannabis industry has become an absolute powerhouse, with sales at a whopping $2.3 Billion in 2022.
New polls in Wisconsin suggest that around 69% of registered voters believe that marijuana should be legal. However, despite this large support for marijuana, the state has failed to pass laws legalizing the possession, distribution, and cultivation of cannabis.
The US Cannabis industry is expected to cross $71 Billion by 2030. Legalizing the possession and sale of cannabis in Wisconsin will allow the state, it’s residents, and its economy to take part in the billion-dollar industry.
Despite repeated attempts to introduce new legislature legalizing the medical and/or recreational use of cannabis, marijuana remains illegal in the state of Wisconsin.
Using marijuana recreationally is completely prohibited, whereas medical use is limited to low-THC cannabis oil (CBD Oil).
Wisconsin legalized the use of CBD Oil to treat certain medical conditions in 2014. However, the regulations were very strict and access was limited.
In 2017, the state passed another bill relaxing the rules for the possession and distribution of CBD Oil which makes it easier for qualifying patients to access the drug and use it.
At the local level, numerous municipalities and counties, including Maddison and Milwaukee, have decriminalized or eased the regulations regarding the possession of marijuana.
At the state level, however, possession of marijuana after the first offense is considered a felony and is punishable by prison time as well as hefty fines. The sale and cultivation of any amount of cannabis is also considered a felony and has harsh penalties.
Despite cannabis being currently illegal, there is a growing possibility of legalization in the next couple of years. When medical or recreational cannabis is finally legalized in Wisconsin, businesses will be vulnerable to risks and problems that may harm their profitability,
The controversial nature of cannabis and its high demand in the market can leave cannabis businesses vulnerable to security and liability risks. Post-legalization, businesses in Wisconsin will have to worry about theft, safety, and the liabilities associated with running a cannabis business.
Due to the inconsistencies between federal and state law, there are different regulations throughout the US regarding cannabis use. This can create uncertainty for cannabis businesses as they navigate between a sea of conflicting laws.
Moreover, cannabis regulations are subject to change and businesses face the risk of non-compliance if they don’t operate within their state and their city’s legislature.
Various cities in one state may have different laws concerning the criminalization of marijuana, further increasing the risk of legal action incase of non-compliance. This makes it even more important to stay up-to-date with the state’s laws regarding cannabis.
Types of Cannabis Insurance Coverage in Wisconsin
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. Product 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. Workers’ Compensation insurance 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. Product 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. Workers’ Compensation insurance covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly.
Choosing the Right Cannabis Insurance Policy in Wisconsin
With a booming cultivation sector protecting crops with the right insurance is an essential and core business practice that helps all long-term industries. From the seed to the purchase, we offer a variety of business insurance to protect anything from general liability to any specific cannabis needs
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.
Benefits of Cannabis Insurance for Wisconsin Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Wisconsin, 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.
Due to the illegal nature of cannabis in Wisconsin, there are no legal requirements or allowances for running a cannabis business. However, as state law regarding the distribution of cannabis changes, laws for insurance may also change.
- 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 Wisconsin
Cannabis Insurance in Wisconsin
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 not required by law in Wisconsin. Cannabis laws in the state make it illegal to own and operate a cannabis business. The distribution of cannabis in the state of Wisconsin is considered a felony offense and is punishable by prison or hefty fines.
You can file a cannabis claim like any other insurance claim in Wisconsin. You need to contact your cannabis insurance provider to report a claim. Your claim will then be filed and validated depending on your proof of the incident.
It’s always necessary to check out your insurance coverage policy to see if the claim is covered by your insurance company.