Cannabis Insurance
in Iowa
The state only allows CBD options for its residents; neither medical nor recreational cannabis is legal. Even though the CBD regulations are strict in the state, being insured as a CBD farmer is essential to success.
Understanding the Iowa Cannabis Industry
As of 2023, Cannabis remains illegal for recreational use in Iowa if classified as marijuana. The state of Iowa and many individual cities have made attempts to decriminalize possession of cannabis over the year but all these attempts remained unsuccessful.
However, consumable hemp products including CBD products are legal for registered retailers to sell and consumers to possess.
In May 2014, the Medical Cannabidiol Act legalized CBD oil for the treatment of epilepsy. In 2017, this act was expanded to cure other diseases, and patients with cancer, ‘untreatable’ pain, multiple sclerosis, HIV/AIDS, Chron’s, Parkinson’s, nausea, and cachexia were able to obtain a marijuana card.
As of 2023, there are more than 9000 medical marijuana patients in the state. Residents can apply for a Medical Marijuana Card from the comfort of their homes.
Overview of Iowa’s Cannabis Market
A 2014 poll by Iowa Poll showed that residents of the state favored legalizing medical marijuana 59%-31% and opposed recreational marijuana 28%-69%.
A majority of Iowans support the use of marijuana in medicine and the stigma around it isn’t negative. However, there is a zero-tolerance policy for the use of the drug for recreational reasons.
The state government is trying to expand the use of marijuana even further. If Senate Bill SF73 is passed, it would legalize the possession of the drug for legal adult residents and non-residents 21 years of age or older.
They would be allowed to carry an amount not exceeding 30 grams of marijuana flower, 5 grams of concentrate, and 500mg of (THC) contained in a product infused with marijuana.
However, the bill isn’t passed as of now and cannabis flowers remain illegal. Possession of even one joint can land consumers up to 6 months in jail in Iowa and a $1,000 fine!
Cannabis Laws and Regulations in Iowa
Under the current law, up to 4.5g (4500mg) of total THC per 90-day period, unless certified by their practitioner for more, can be purchased by individuals 18 and over with an Iowa medical cannabis card.
Home cultivation of any cannabis plants by individuals other than licensed cultivators remains illegal.
Non-residents can also possess marijuana in the state of Iowa only if they have a valid out-of-state medical cannabis or medical marijuana card.
Risks Faced by Cannabis Businesses in Iowa
The number 1 problem faced by cannabis businesses in Iowa is that insurers are reluctant to provide coverage for the use of the drug.
Then, of course, there are financial risks since such businesses need unique coverages. But the cannabis industry in Iowa is growing rapidly and if the senate bill SF73 is passed, it will grow at an even faster rate.
The state isn’t too far away from reaping the benefits of this growing industry in the country.
A 2014 poll by Iowa Poll showed that residents of the state favored legalizing medical marijuana 59%-31% and opposed recreational marijuana 28%-69%.
A majority of Iowans support the use of marijuana in medicine and the stigma around it isn’t negative. However, there is a zero-tolerance policy for the use of the drug for recreational reasons.
The state government is trying to expand the use of marijuana even further. If Senate Bill SF73 is passed, it would legalize the possession of the drug for legal adult residents and non-residents 21 years of age or older.
They would be allowed to carry an amount not exceeding 30 grams of marijuana flower, 5 grams of concentrate, and 500mg of (THC) contained in a product infused with marijuana.
However, the bill isn’t passed as of now and cannabis flowers remain illegal. Possession of even one joint can land consumers up to 6 months in jail in Iowa and a $1,000 fine!
Under the current law, up to 4.5g (4500mg) of total THC per 90-day period, unless certified by their practitioner for more, can be purchased by individuals 18 and over with an Iowa medical cannabis card.
Home cultivation of any cannabis plants by individuals other than licensed cultivators remains illegal.
Non-residents can also possess marijuana in the state of Iowa only if they have a valid out-of-state medical cannabis or medical marijuana card.
The number 1 problem faced by cannabis businesses in Iowa is that insurers are reluctant to provide coverage for the use of the drug.
Then, of course, there are financial risks since such businesses need unique coverages. But the cannabis industry in Iowa is growing rapidly and if the senate bill SF73 is passed, it will grow at an even faster rate.
The state isn’t too far away from reaping the benefits of this growing industry in the country.
Types of Cannabis Insurance Coverage in Iowa
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 Iowa
Insuring yourself in a state with highly severe legal ramifications for even possession of cannabis is essential for any CBD farmers and cultivates in the state. For example, if you are a CBD vendor in Iowa, being insured against the risks increases the potential for success.
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 Iowa Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Iowa, 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 requirements to obtain a medical marijuana card. All you need is certification from your healthcare practitioner.
For cannabis-related businesses, they should just follow the basic guideline that any agricultural or manufacturing business does when it comes to insurance.
Some insurances recommended to protect your cannabis-related business are;
- General Liability Insurance (GLI)
- Workers’ Compensation Insurance
- Fire Insurance
s of Businesses Covered:
- 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 Iowa
Cannabis Insurance in Iowa
Frequently Asked Questions
Cannabis insurance addresses risks specific to the cannabis industry. This includes workplace injuries, bodily injuries, property damage accidentally caused to others, crop failure, and theft. Your cannabis insurance can cover a wide range of risks depending on your requirements and the scale of your business.
The cost of cannabis insurance depends on the type of coverage you choose. However, you can expect to pay anywhere between a few hundred dollars to tens of thousands of dollars depending on your requirements and the size of your business.
Generally, the price of cannabis insurance is higher because the industry has more risks than other industries.
There are no current cannabis business insurance requirements in the state of Iowa. You’re not required to have insurance for your cannabis business. However, it’s always better to have some sort of insurance for your business such as general liability and property damage.
Similar to all insurance claims, the process for cannabis insurance is the same. Your insurance company will be able to help you out. It’s 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.