Cannabis Insurance
in Idaho
Under the Idaho Uniform Controlled Substances Act, marijuana is a Schedule I hallucinogenic substance. However, despite Idaho’s refusal to legalize or decriminalize cannabis, many companies survive and thrive in the Gem State. Their key to success is having strategic risk management plans, where customized cannabis insurance comes into play. Only insurance calibrated to the cannabis industry can withstand the challenges Idaho companies face.
Understanding the Idaho Cannabis Industry
In the 20th century, during the “War on Drugs” movement in America, cannabis was criminalized in Idaho. In 1927, the State passed its 1st law criminalizing the use of marijuana. Idaho has strict laws with a zero-tolerance policy against the use and possession of both recreational and medicinal marijuana. To date, it is one of the only 3 states that has not legalized marijuana even for medicinal use.
Even though it is surrounded by three states with legalized use of marijuana (Nevada, Oregon, and Washington) any attempts to legalize marijuana within the state remain unsuccessful.
The cannabis industry remains unpopular, highly regulated, and complicated within the state. However, as of 2018, pharmaceutical-grade CBD with 0% THC can be used by epileptic children in a limited quantity. This was made possible once the FDA legalized it in the country.
In 2015, Senate Bill 1146a legalized CBD for severe epileptic cases. In 2019, 2 years after the Agriculture Improvement Act of 2019, the license for the production, processing, and transport of industrial hemp can be obtained. This hemp must have less than 0.3% THC.
Idaho State Department of Agriculture has an online portal where residents can apply for licensing for the production of hemp. The handling of hemp products started in 2022.
Overview of Idaho’s Cannabis Market
The stigma around marijuana’s social and economic culture is negative in the state. That restricts the open mindset regarding the use of marijuana.
After 10 failed years of Initiative, the state is trying to go towards reform. In the upcoming 2024 ballots, Kind Idaho, a non-profit organization is taking initiative. It needs to have 74000 signatures by April 2024 from registered voters to start the initiative for the ballot.
Kind Idaho intends to use social media as well as educate the residents and spread awareness about the positive side of medicinal marijuana to make this ballot different from the previously failed ones.
Cannabis Laws and Regulations in Idaho
Idaho’s current legal status in terms of cannabis remains unchanged. Residents are not allowed to use or possess any cannabis or marijuana-based products within the state. There is currently no market for it in Idaho.
Under current law, an individual who has up to an ounce of marijuana is charged with 1 year in jail and a fine of $1000. Discrimination is more evident as minorities suffer more under this law. The racial disparity is higher in Idaho as the black community is four times more likely to be arrested for possession of marijuana.
A citizen-run ballot initiative is in the works for 2024 in efforts to legalize medicinal marijuana in Idaho.
Risks Faced by Cannabis Businesses in Idaho
The cannabis industry has a long way to go in Idaho. Most of the cannabis industry’s profit is from recreational marijuana sales. However, that is years to come if it even does in Idaho. Firstly, the medicinal marijuana bill needs to be approved, and it will take a few years for that to be set up, up and get licensed for production and distribution. Idaho is easily 5-10 years away from reaping the benefits of this growing industry in the country.
The stigma around marijuana’s social and economic culture is negative in the state. That restricts the open mindset regarding the use of marijuana.
After 10 failed years of Initiative, the state is trying to go towards reform. In the upcoming 2024 ballots, Kind Idaho, a non-profit organization is taking initiative. It needs to have 74000 signatures by April 2024 from registered voters to start the initiative for the ballot.
Kind Idaho intends to use social media as well as educate the residents and spread awareness about the positive side of medicinal marijuana to make this ballot different from the previously failed ones.
Idaho’s current legal status in terms of cannabis remains unchanged. Residents are not allowed to use or possess any cannabis or marijuana-based products within the state. There is currently no market for it in Idaho.
Under current law, an individual who has up to an ounce of marijuana is charged with 1 year in jail and a fine of $1000. Discrimination is more evident as minorities suffer more under this law. The racial disparity is higher in Idaho as the black community is four times more likely to be arrested for possession of marijuana.
A citizen-run ballot initiative is in the works for 2024 in efforts to legalize medicinal marijuana in Idaho.
The cannabis industry has a long way to go in Idaho. Most of the cannabis industry’s profit is from recreational marijuana sales. However, that is years to come if it even does in Idaho. Firstly, the medicinal marijuana bill needs to be approved, and it will take a few years for that to be set up, up and get licensed for production and distribution. Idaho is easily 5-10 years away from reaping the benefits of this growing industry in the country.
Types of Cannabis Insurance Coverage in Idaho
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 Idaho
Although cannabis has been around for ages, the US still views it as an “emerging” industry, battered by local, state, and federal regulations that don’t align. The Digital Age has introduced cannabis operators to much tech innovation, exposing them to more cyber vulnerability. It’s not uncommon for cannabis companies to face many employment-related issues and safety concerns as employees must often operate high-end equipment. Cannabis insurance has the tall order of mitigating these risks, empowering companies to stay in the game for the long haul.
Cannabis is completely illegal in Idaho, thus having legal challenges for insurance in the state. There are no laws and regulations in terms of providing insurance for cannabis industry-related risks. Insurers can face legal issues as well as issues with federal law if they proceed to provide insurance in this illegal industry.
Considering the illegal status of the substance, it reduces market size and demand significantly. This further diminished profit margins. This industry comes with its sets of risks, which can be a financial burden on the insurer as managing these unclear challenges and huddles is a risk.
Moreover, because of the illegal status, insurance options are limited. It is a reputational hazard as well for the insurer to provide coverage for an illegal business.
However, when cannabis is legalized in Idaho, we know it will be heavily regulated. Being a new industry will come with constant changes in rules and regulations until it comes up with laws that can go on for a longer time period.
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 Idaho Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout California, 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.
Each state has its own legal requirements when it comes to insuring the cannabis business. States like Illinois, California, Massachusetts, and Washington require a certain amount of insurance to be carried by businesses in the cannabis industry.
On the other hand, there are states like Maine and Colorado that do not require specific insurance when it comes to the cannabis industry. It’s debatable which way Idaho would go. However, it is ideal to cover the basics of your business. Ideally, you should contact a professional who will be able to guide you on the type of insurance needed based on your State requirements.
- 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 Idaho
Cannabis Insurance in Idaho
Frequently Asked Questions
Cannabis insurance coverage can include property damage, general liability, theft, cybercrime, and many other things depending on how big or small your business is. If the business caters to cultivation and manufacturing, it requires its own set of coverages. Similarly, for transportation and resale, different types of coverages are required. So it purely depends on the business needs.
The cost of insurance depends on the type of coverage you choose. Having additional coverage and features will cost you more. The insurance can start as small as a few hundred dollars and range to tens of thousands of dollars. Cannabis insurance is generally higher because the cannabis industry faces more risks in the US than other industries.
Although currently cannabis is not legalized in the state, when it does happen it is ideal to have your assets insured. Idaho might have laws for specific types of insurance. Furthermore, you might have to insure the business based on property, small business, or lease requirements.
Generally, it is ideal to have basic liability and worker’s compensation insurance. If you are unclarified on the type of coverage to get, you should consult a specialist who can guide you.
When Idaho does legalize marijuana, companies might have to insure themselves. Similar to all insurance claims, the process remains the same. Your insurance company will be able to help you out. It is best to have as much documentary evidence as possible. Work with your company and make sure to review all the terms and conditions before signing anything.