Delaware Adult-Use Cannabis: Navigating the New Market with Smart Insurance

It’s legal to buy weed in Delaware as of August 1, 2025! Adult-use cannabis was legalized in Delaware back in 2023, and it has taken nearly two years to establish the regulations to govern the industry and issue licenses to get the supply chain started.

While most of the Northeast has legalized cannabis, rollout of adult-use has been much slower south of the Mason-Dixon line, and Delaware is blazing a path forward for other southern states to follow. As with the establishment of any new cannabis market, opportunities abound for resilient and flexible entrepreneurs in this space.

To be successful in the Delaware adult-use cannabis market takes more than a love for the plant—it takes careful planning, market resilience, and strategic risk management.

The Delaware recreational market, like every adult-use cannabis market, is a silo, but it is impacted by what happens at the federal level. Since cannabis is still federally illegal, Delaware-based cannabis businesses will face many of the same legal risks as companies do in other states, particularly surrounding banking and payment options.

The cannabis program in the first state is overseen by the Office of the Marijuana Commissioner (OMC) as established by the Delaware Marijuana Control Act. This office controls the licensing requirements and distribution, and is responsible for establishing operational standards and protocols for seed-to-sale tracking.

Like many states, there is a catch-22 of applying for a cannabis license in Delaware; businesses must show proof of insurance before licenses will be issued, but many insurance companies will not issue a policy before licensing. AlphaRoot helps cannabis businesses with a certificate of insurance to accompany an application, showing proof of insurance when the license is issued.

While the exact umbrella of insurance coverage necessary is unique and specific to your business, there are a handful of policies that are important for every business in cannabis to have, as a fundamental layer of protection.

Best Insurance for Delaware Adult-Use Cannabis Companies

General Liability Insurance

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 Insurance

Cannabis companies offering 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

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.

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.

Crime Insurance

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 Insurance

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.

Business Interruption Insurance

Provides compensation to 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.

Employment Practices Liability Insurance (EPLI)

Cannabis companies with any number of employees face the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects cannabis companies against lawsuits related to employment practices.

Best Insurance for Cannabis Cultivators in Delaware

Cultivators are the start of the cannabis supply chain, facing unique risks surrounding cannabis plants.

Additional policies that are important for cannabis cultivators to hold include:

• Crop Damage: Provides coverage for losses due to perils (fire, theft, vandalism, and natural disasters). This policy reimburses growers for the value of damaged or destroyed crops, ensuring financial recovery and continuity of cultivation operations. For both indoor and outdoor cultivation.
• Property Insurance: Protects your facilities, inventory, and machinery from coverage perils, safeguarding your investment in expensive machinery and equipment.
• Equipment Breakdown Insurance: Provides crucial coverage in the event of mechanical failure, from irrigation systems and lighting to HVAC infrastructure.
• Pollution Liability: Particularly important for outdoor cultivation facilities, this policy provides coverage for environmental damage to your crops caused by pollutants.

These are just a few of the potential policies your business may need. The best coverage comes from a tailored insurance umbrella created by a cannabis insurance expert that ensures you’re protected from all angles.

Delaware dispensaries face a plethora of risks, some common to all retail businesses and others specific to the cannabis industry. The combination of high foot traffic and a cash-heavy business is a unique risk that dispensaries must mitigate through robust security practices. These may include comprehensive surveillance systems, alarms, access control, and specific cash handling practices, among other strategies. Customer safety is a risk that all retail operations face, but cannabis businesses in Delaware must also consider premises liability with a strongly regulated substance.

Challenges like inventory management are common to retail operations; it’s imperative to balance holding enough inventory while keeping enough cash on hand. However, diversion prevention is a unique cannabis industry challenge, as cannabis products are still federally illegal and carry a high street value. This risk ties into the challenge of employee training for dispensaries.

Budtenders are retail workers who are expected to also be cannabis experts and compliance savvy. Proper and ongoing training is necessary to ensure your employees understand the breadth of their responsibilities as it pertains to compliance and security, as well as customer service.

Protecting Your Cannabis Investment in Delaware: Comprehensive Strategies

Insurance is an important part of risk mitigation, but it is ultimately just one piece of the risk management puzzle. A holistic risk management plan is a living document that details all of the risks your business may face, analyzes the risk of impact and the fallout, and details a plan for dealing with the risk or reducing it. For a step-by-step guide on creating a risk management plan, check out this blog.

In addition to insurance, a cannabis business must protect itself financially and from a compliance standpoint. This approach may include regular risk assessment and internal audits to identify potential areas of exposure, and developing a crisis management plan to deal with potential problems from a recall to disastrous weather.

It should also include robust and honest financial planning along with capital protection to weather the changes of this often-turbulent industry. Due diligence in creating partnerships throughout the supply chain is also important for protecting your cannabis companies; the right partners can make your business run more smoothly, while the wrong partners can actually increase your liability.

The challenges that cannabis businesses will face in Delaware are nothing new—few banking options, financial limitations, evolving regulations, market saturation, high rates of competition, talent acquisition, and local zoning restrictions are roadblocks that companies in every state must face. The good news is that you don’t have to reinvent the wheel to solve these problems: companies have had to solve these problems for over a decade to participate in the cannabis industry. You can find solutions you like by researching other companies, or perhaps a roadmap of pitfalls to avoid.

Success in the cannabis industry doesn’t happen in a silo—the most stable and profitable businesses have a network of partners that ensure businesses are compliant and competitive. One major area where partnerships can serve new cannabis operators is in insurance, a complex and often jargon-heavy necessity. The right cannabis insurance partner can even help you develop a strategic insurance and risk management plan, putting their expertise to work for your business.

As a new adult-use state, the Delaware recreational market offers canna-businesses immense potential for growth and expansion. Setting your business up for long-term success takes careful planning and consistent execution of risk management strategies. But you don’t have to do this alone. Finding the right partner for cannabis insurance helps secure your investment and makes navigating the complex red tape a little easier.

Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by email [email protected] or calling 646-854-1093 for a customized letter or learning more about your cannabis insurance options.