Cannabis Insurance
in Kansas
Ranked at 46th market for cannabis in America, the use of cannabis in Kansas is entirely illegal. Kansas has no tolerance for cannabis, and possession can be incarceration time.
Kansas is one of the only four states left in the US where the use of any form of marijuana is still illegal. Efforts are being done throughout the past decade in order to bring marijuana reform to Kansas.
Understanding the Kansas Cannabis Industry
In the early 20th century a lot of the states located south of the Mississippi River banned cannabis. Kansas did the same in 1927.
Between 2013-2015 multiple attempts were made to legalize medicinal marijuana but all the bills stalled in the Senate. In 2015, the city of Wichita also voted to decriminalize the possession of marijuana. It would have reduced the punishment for possession of marijuana to fines and imprisonment. This vote was approved in 2017.
In 2018, under Kansas Medical Marijuana Act, CBD oil with low levels of THC was legalized in the state. In 2021, a bill was passed to the Senate house to vote on although no progress has been made on it. The bill would have legalized the medicinal use of marijuana in the State.
Overview of Kansas’s Cannabis Market
When marijuana is legalized in the state, there will be a 10% tax imposed on sales. This is a huge market revenue that the State is missing out on. Apart from this Kansas is missing out on thousands of employment opportunities that this industry can bring to the State residents.
The industry has the potential to bring in millions of dollars. The state has shown leniency over CBD and hemp products however there is still opposition from law enforcement officers over the negative stigma that marijuana has. This has delayed the approval of the 2021 bill that calls for legalizing marijuana and reducing the sentences for illegal possession of it.
Cannabis Laws and Regulations in Kansas
Kansas has strict laws and regulations when it comes to cannabis. Only CBD products with less than 0.3% THC are considered legal.
A fine on the possession of marijuana starts from as little as $1000 up to $100,000 with 42 months of imprisonment.
Similarly, Kansas has strict laws on the cultivation and sale of marijuana; starting as low as 51 months of imprisonment and $300,000 in fines up to $500,000 in fines.
Risks Faced by Cannabis Businesses in Kansas
The cannabis industry has not even been initiated in this State. However, once it does legalize it is safe to assume that it will face similar risks as the industries all over the country. Because it is a highly regulated industry with constant changes in laws, it is crucial to keep up to date. Furthermore, it does not help that cannabis is illegal by the Federal Board. That creates a lot of financial restrictions.
When marijuana is legalized in the state, there will be a 10% tax imposed on sales. This is a huge market revenue that the State is missing out on. Apart from this Kansas is missing out on thousands of employment opportunities that this industry can bring to the State residents.
The industry has the potential to bring in millions of dollars. The state has shown leniency over CBD and hemp products however there is still opposition from law enforcement officers over the negative stigma that marijuana has. This has delayed the approval of the 2021 bill that calls for legalizing marijuana and reducing the sentences for illegal possession of it.
Kansas has strict laws and regulations when it comes to cannabis. Only CBD products with less than 0.3% THC are considered legal.
A fine on the possession of marijuana starts from as little as $1000 up to $100,000 with 42 months of imprisonment.
Similarly, Kansas has strict laws on the cultivation and sale of marijuana; starting as low as 51 months of imprisonment and $300,000 in fines up to $500,000 in fines.
The cannabis industry has not even been initiated in this State. However, once it does legalize it is safe to assume that it will face similar risks as the industries all over the country. Because it is a highly regulated industry with constant changes in laws, it is crucial to keep up to date. Furthermore, it does not help that cannabis is illegal by the Federal Board. That creates a lot of financial restrictions.
Types of Cannabis Insurance Coverage in Kansas
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 Kansas
When Kansas becomes a cannabis-regulated state, it will run against many policies and procedures that will need attention so that the businesses interested in mitigating risks and concerns before jumping into this state’s requirements long term.
To ensure compliance with all the state laws and rules, insurance experts are one of the best guides.
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 Kansas Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Kansas, 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.
As per the 2021 bill, a medical registry would have to be manitained with information on patients and caregivers. Cannabis businesses should just follow the basic guideline that any agricultural manufacturing or resale business does when it comes to insurance.
Some insurances recommended to protect your cannabis-related business are;
- General Liability Insurance
- Workers’ Compensation Insurance
- Property and Auto Insurance
- 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 Kansas
Cannabis Insurance in Kansas
Frequently Asked Questions
Cannabis insurance covers a wide range of risks depending on the type of insurance you choose and your business requirements. Cannabis insurance mostly consists of general liability, theft, cybercrime, D&O, property damage, and anything else closely related to cannabis.
Insurance costs are dependent upon how large scale the business is. You can find cannabis insurance costs anywhere between a few hundred dollars to tens of thousands of dollars. Sometimes they can even go up to millions of dollars depending on the scale and requirements of your business.
You’ll find cannabis insurance to be higher than other industries because of the additional risks involved in the cannabis world.
In Kansas, cannabis is illegal through and through. Considering how it still is fighting to get medicinal marijuana legalized it is safe to assume that there will be strict laws and rules when it comes to the cannabis industry. In the future, there are high chances of insurance laws and policies that need to meet to establish the business in the state.
Similarly to how any insurance claims work, all insurance claims are filed through your insurance company. You should work with them to make the whole process easier. Providing as much physical proof and witnesses as possible makes your case stronger. This fastens up the entire process in case you need to claim your insurance money.