Cannabis Insurance
in Alaska
Alaska has been a leader in the cannabis initiative since 1998. The state has been progressive in showing the continental US how to develop a regulated cannabis state. Insuring those initiatives start forward-thinking is one of the primary missions at Alpharoot.
Understanding the Alaska Cannabis Industry
In Alaska, cannabis is allowed for both medicinal and recreational uses. Marijuana Legalization Ballot Measure 2 was approved by the state government, legalizing marijuana use for leisure purposes for people older than 21 years of age beginning in 2015.
With only a handful of authorized cultivators, producers, and dispensaries, the business is still comparatively limited compared to other states.
Alaska has between 70,000 to 90,000 in-state users, and according to the Alaska Economic Trends for December 2022, Alaska’s employment rate in the cannabis business has increased consistently over time.
Approximately 10,000 Alaskans are employed directly or indirectly in marijuana distribution, production, and sales. Cannabis in Alaska is produced at home by citizens with the appropriate licenses.
The state recently approved legislation permitting on-site consumption at authorized dispensaries to increase business opportunities. Alaska’s cannabis business shows potential for development and growth in the coming years, despite being in its initial stages.
Overview of Alaska’s Cannabis Market
The distribution and sale of cannabis brought in more than $28 million in taxes for the state in 2021.
The amount and variety of cannabis supplied in Alaska are taxed differently by producers and dispensaries. The state levies a tax of $50/ounce for grown plants, and for juvenile plants, the tax is $25/ounce. The fee for every single clone is $1/type.
The following marijuana tax receipts were reported by the Tax Division of the Alaska Department of Revenue from 2017 to 2022:
These numbers show an increasing trend in the market, which is expected to have lots of sales potential in the coming years.
Alaska Cannabis Laws and Regulations
According to state legislation, if a person is over 21 and possesses one ounce or less of marijuana, they are not liable for any legal or criminal consequences.
Although it is permissible to use marijuana recreationally on private land, doing so on public property is still strictly prohibited.
Additionally, businesses are allowed to acquire, cultivate, make, deliver, or move up to six grown cannabis plants to anyone who is 21 years old or higher. The legal definition of cannabis is comprehensive and probably includes products like cannabidiol.
Commercial enterprises need to acquire the necessary licenses to conduct lawful operations within the state.
The four license categories Alaska provides are:
- Retail marijuana shops.
- Cannabis cultivation facilities.
- Marijuana production facilities for various items.
- And marijuana testing facilities.
Alaska became the first state to legalize cannabis use inside independent retail marijuana stores on April 11, 2019, as long as the businesses create dedicated smoking spaces for customers. The only places in Alaska where edibles may be consumed are shops; other municipal laws vary.
Risks Faced by Cannabis Businesses in Alaska
There is a significant risk of oversupply and rivalry among Alaskan cannabis companies. The Alaskan cannabis market is expanding, and as more companies join the market, the level of rivalry increases. This may lead to a drop in prices and earnings, making it challenging for companies to stay afloat. Companies may prioritize the amount over quality to meet demand, which can result in problems with product quality.
The rate of job growth and tax income growth appears to be leveling off in Alaska’s cannabis sector after years of expansion.
The evaluation comes from a recent study by the state’s Department of Labor and Workforce Development on Alaska’s economic patterns. The study says that the industry has become more mature compared to previous years.
The distribution and sale of cannabis brought in more than $28 million in taxes for the state in 2021.
The amount and variety of cannabis supplied in Alaska are taxed differently by producers and dispensaries. The state levies a tax of $50/ounce for grown plants, and for juvenile plants, the tax is $25/ounce. The fee for every single clone is $1/type.
The following marijuana tax receipts were reported by the Tax Division of the Alaska Department of Revenue from 2017 to 2022:
These numbers show an increasing trend in the market, which is expected to have lots of sales potential in the coming years.
According to state legislation, if a person is over 21 and possesses one ounce or less of marijuana, they are not liable for any legal or criminal consequences.
Although it is permissible to use marijuana recreationally on private land, doing so on public property is still strictly prohibited.
Additionally, businesses are allowed to acquire, cultivate, make, deliver, or move up to six grown cannabis plants to anyone who is 21 years old or higher. The legal definition of cannabis is comprehensive and probably includes products like cannabidiol.
Commercial enterprises need to acquire the necessary licenses to conduct lawful operations within the state.
The four license categories Alaska provides are:
- Retail marijuana shops.
- Cannabis cultivation facilities.
- Marijuana production facilities for various items.
- And marijuana testing facilities.
Alaska became the first state to legalize cannabis use inside independent retail marijuana stores on April 11, 2019, as long as the businesses create dedicated smoking spaces for customers. The only places in Alaska where edibles may be consumed are shops; other municipal laws vary.
There is a significant risk of oversupply and rivalry among Alaskan cannabis companies. The Alaskan cannabis market is expanding, and as more companies join the market, the level of rivalry increases. This may lead to a drop in prices and earnings, making it challenging for companies to stay afloat. Companies may prioritize the amount over quality to meet demand, which can result in problems with product quality.
The rate of job growth and tax income growth appears to be leveling off in Alaska’s cannabis sector after years of expansion.
The evaluation comes from a recent study by the state’s Department of Labor and Workforce Development on Alaska’s economic patterns. The study says that the industry has become more mature compared to previous years.
Types of Cannabis Insurance Coverage in Alaska
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 Alaska
Being successful long-term means protecting your business from environmental, employee, state, or general liability risks, to only name a few. Cannabis insurance works to mitigate these risks, enabling companies to stay on the path to profitability. Whether your specialty is growing, distributing, or all aspects, we can help navigate these threats.
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 Alaska Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Massachusetts, 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.
There are no such legal insurance requirements in Alaska as the cannabis idustry is still in it’s initial development stages. For more information on other laws and regulations visit Alaska’s Alcohol and Marijuana Control Office website.
- 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 Alaska
Cannabis Insurance in Alaska
Frequently Asked Questions
Cannabis insurance offers protection for companies in the marijuana industry and may safeguard against a variety of hazards. It usually consists of property coverage to cover loss or damage to real estate or machinery, product liability insurance to cover injuries brought on through products, business disruption insurance, and cyber liability coverage to cover data leaks.
Other hazards specific to the cannabis business, like crop loss or product delivery, may also be covered by policies. To make sure they have enough coverage for their unique requirements and risks, cannabis company owners should consult with a trustworthy insurance company.
Cannabis insurance premiums are higher than those for other companies because of the risks associated with the substance and the fact that it is classified as a schedule 1 prohibited drug by the federal government. For example, the expense of liability insurance on an annual basis can range from a few hundred dollars to tens of thousands of dollars.
Cannabis insurance is not legally required in the state of Alaska. However, it is advised to have some form of protection for your cannabis companies due to the hazardous nature of the industry.
For more information on laws and regulations, visit Alaska’s Alcohol and Marijuana Control Office website.
The first stage is to contact your insurance company, inform them about the claim, and give them all the information they need to process it. Then, you might have to fill out papers and offer proof to back up your claim.
Cooperation with the claims supervisor handling your claim is crucial. You should also follow up frequently to find out how your claim is progressing and provide any further details or documents needed.