Cannabis Insurance
in North Carolina
When states and federal laws are different, regulations can be unique to each state, and in North Carolina, the industry of cannabis is currently illegal.
Due to the lack of legal options, the residents of North Carolina are currently unable to enjoy the potential benefits of cannabis. This can be a frustrating situation for patients who need marijuana as a cure for their ailments, or even for recreational users chasing a high.
Understanding the North Carolina Cannabis Industry
Despite an increasing number of states legalizing the use of marijuana, North Carolina 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 cannabis is illegal in North Carolina and possession, cultivation, and distribution of cannabis in the state can result in prosecution.
Overview of North Carolina's Cannabis Market
Due to the illegal nature of cannabis in North Carolina, there is no official data regarding how much the state’s cannabis market is currently worth.
According to New Frontier US Cannabis Report, there are an estimated 1.6 million medical cannabis consumers in North Carolina. This suggests that the cannabis industry will have many potential customers post-legalisation, demonstrating the potential for growth of the market in NC.
The US Cannabis industry is expected to cross 71 Billion Dollars by 2030. Legalizing the possession and sale of cannabis will open the doors to the billion-dollar cannabis industry and benefit North Carolina’s economy.
North Carolina Cannabis Laws and Regulations
Despite small medical marijuana bills and repeated attempts to legalize medical cannabis, marijuana remains illegal in North Carolina.
Currently, marijuana is still considered a class 6 substance and it is illegal to knowingly possess, use, cultivate or sell it under the North Carolina Controlled Substance Act. However, the “Tar-Heel” state is taking big steps on the journey toward the legalization of marijuana.
A bill introduced to legalize the use of medical marijuana passed through the state senate in 2023, and is awaiting approval from the House. If this “Compassionate Care’ Bill is signed, it would legalize the use of cannabis for qualified patients with certain ailments.
The state previously signed legislation that permits the use of low potency CBD Oil for patients with epilepsy. The state also decriminalized the possession of small amounts of marijuana (less than 1.5 ounces), classifying it as a misdemeanor and penalizing it with a small fine.
Possession of more than 1.5 ounces of marijuana, however, is considered a felony and is punishable by prison and a hefty fine. The distribution of any amount of marijuana is a felony punishable by up to 39 months in prison and a fine of up to $5,000.
Risks Faced by Cannabis Businesses in North Carolina
With North Carolina passing a cannabis related legislature in the near future, businesses in the industry may face potential risks and problems.
The controversial nature of cannabis and its high demand can leave cannabis businesses vulnerable to security and liability risks. After legalization, businesses in North Carolina 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 cities legislature. 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 North Carolina, there is no official data regarding how much the state’s cannabis market is currently worth.
According to New Frontier US Cannabis Report, there are an estimated 1.6 million medical cannabis consumers in North Carolina. This suggests that the cannabis industry will have many potential customers post-legalisation, demonstrating the potential for growth of the market in NC.
The US Cannabis industry is expected to cross 71 Billion Dollars by 2030. Legalizing the possession and sale of cannabis will open the doors to the billion-dollar cannabis industry and benefit North Carolina’s economy.
Despite small medical marijuana bills and repeated attempts to legalize medical cannabis, marijuana remains illegal in North Carolina.
Currently, marijuana is still considered a class 6 substance and it is illegal to knowingly possess, use, cultivate or sell it under the North Carolina Controlled Substance Act. However, the “Tar-Heel” state is taking big steps on the journey toward the legalization of marijuana.
A bill introduced to legalize the use of medical marijuana passed through the state senate in 2023, and is awaiting approval from the House. If this “Compassionate Care’ Bill is signed, it would legalize the use of cannabis for qualified patients with certain ailments.
The state previously signed legislation that permits the use of low potency CBD Oil for patients with epilepsy. The state also decriminalized the possession of small amounts of marijuana (less than 1.5 ounces), classifying it as a misdemeanor and penalizing it with a small fine.
Possession of more than 1.5 ounces of marijuana, however, is considered a felony and is punishable by prison and a hefty fine. The distribution of any amount of marijuana is a felony punishable by up to 39 months in prison and a fine of up to $5,000.
With North Carolina passing a cannabis related legislature in the near future, businesses in the industry may face potential risks and problems.
The controversial nature of cannabis and its high demand can leave cannabis businesses vulnerable to security and liability risks. After legalization, businesses in North Carolina 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 cities legislature. This makes it even more important to stay up-to-date with the state’s laws regarding cannabis.
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. 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 North Carolina
Like many states in the United States, North Carolina has not legalized cannabis. When or if the condition becomes an opportunity for insurance. We are eager to help them navigate the regulations as we have done with other states.
Start protecting your cannabis business
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 North Carolina Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout North Carolina, 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 North Carolina, 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 North Carolina
Cannabis Insurance in North Carolina
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.
No, cannabis insurance is not required by law in North Carolina. Cannabis laws in the state make it illegal to own and operate a cannabis business. The distribution of cannabis in the state of North Carolina is considered a felony offense and is punishable by prison or hefty fines.
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.
