Cannabis Insurance
in Massachusetts
The cannabis industry is building in Massachusetts. Making sure that your business is protected in this fluid landscape is essential. Companies with the best success will partner with someone who can help with the specific risks of the industry. We help you grow into their unique situation.
The legalization of recreational marijuana came pretty late to Massachusetts in 2016. Since then, the cannabis industry has been ever-growing. The laws protecting this business are essential in this state for its success. The state ranks at number 3 for having the most favorable laws and regulations for the cannabis industry.
However, this industry comes with its own set of risks. Thus, the cannabis business is legally required to have insurance in place. These insurances can range from protecting property and equipment as well as transport and raw material. They are also fully customizable based on business needs.
Understanding the Massachusetts Cannabis Industry
In 2012, Massachusetts became the 18th State to legalize medicinal marijuana. Winning the ballot with 63% votes in favor. These patients were legally allowed to carry a maximum of 60 days’ worth of marijuana at a time.
However, it was not until four years later in 2016 that recreational marijuana was legalized. And even then the right to sell them legally did not come into effect until July 2018.
Finally, the first 2 dispensaries licensed to sell marijuana legally opened in November 2018 located in Leicester and Northampton. From here the cannabis industry saw continuous growth with the law allowing public consumption in lounges and cafes in 2020. Furthermore, the home delivery business also expanded in 2021.
As of 2023, the State has over 275 legal dispensaries and over 150 potential applications pending license approval.
Overview of Massachusetts's Cannabis Market
As of January 2023, the cannabis industry in Massachusetts has crossed over $4 billion in sales. The massive industry has created over 16,000 job opportunities in the state. It is one of the few states that saw a 4% increase in sales from 2021 to 2022.
The state of Massachusetts charges a 10.75% cannabis excise tax rate, along with a 6.25% sales tax and a 3% local tax. The industry paid approximately $250 million in taxes in the year
2022.
The State designed body Massachusetts Cannabis Control Commission is responsible for all the legalities, laws, and regulations and for overseeing the industry operations.
Massachusetts Cannabis Laws and Regulations
As the cannabis industry sees a massive expansion in Massachusetts, the Government has put in laws to protect the industry as well as the people.
The legal age for the possession of marijuana is 21 years old. As per the law, someone between the age of 18-21 carrying less than an ounce will only have penalties and not be tried for criminal activity. On the other hand, it’s illegal for anyone above the age of 21 to possess or use more than an ounce, to grow more than 10 ounces on a private residency, to consume marijuana in public (apart from defined places), and to transport it improperly packed or out of state. Identification is required for the purchase of cannabis. You can find a detailed list of all the laws regarding recreational marijuana over here.
Other than this, Massachusetts has now become the 1st state to add Cannabis Education to its curriculum. This is geared towards teenagers to highlight the risks of driving under the influence of Cannabis.
Risks Faced by Cannabis Businesses in Massachusetts
The Cannabis industry is flouring within the state at a high rate which is coming with its own set of risks and issues. The industry was initially deemed as an investment as good as gold. However, over the years it has become a commercial commodity. This has vastly decreased the profit margins. The demands and use have increased over the years.
The Cannabis industry needs to comply with a strict set of regulations. These include mindfulness over licensing, secure packaging and transportation, accurate labeling, and cultivation of the products to ensure quality. If these businesses are non-compliant they can face heft penalties and charges.
The cannabis industry is at risk of theft and burglaries at all times. These can cost millions of dollars worth of financial and reputation loss. Hence why having strong security measures are extremely important.
Cannabis is still illegal under Federal law. This brings up uncertainty for the security of the business itself. Moreover, financial institutes like banks are also hesitant to work with cannabis companies.
Overall there is still a stigma around the use of cannabis. In a concentrated market with a semi-negative public image, it’s difficult to let the company grow and flourish.
As of January 2023, the cannabis industry in Massachusetts has crossed over $4 billion in sales. The massive industry has created over 16,000 job opportunities in the state. It is one of the few states that saw a 4% increase in sales from 2021 to 2022.
The state of Massachusetts charges a 10.75% cannabis excise tax rate, along with a 6.25% sales tax and a 3% local tax. The industry paid approximately $250 million in taxes in the year
2022.
The State designed body Massachusetts Cannabis Control Commission is responsible for all the legalities, laws, and regulations and for overseeing the industry operations.
As the cannabis industry sees a massive expansion in Massachusetts, the Government has put in laws to protect the industry as well as the people.
The legal age for the possession of marijuana is 21 years old. As per the law, someone between the age of 18-21 carrying less than an ounce will only have penalties and not be tried for criminal activity. On the other hand, it’s illegal for anyone above the age of 21 to possess or use more than an ounce, to grow more than 10 ounces on a private residency, to consume marijuana in public (apart from defined places), and to transport it improperly packed or out of state. Identification is required for the purchase of cannabis. You can find a detailed list of all the laws regarding recreational marijuana over here.
Other than this, Massachusetts has now become the 1st state to add Cannabis Education to its curriculum. This is geared towards teenagers to highlight the risks of driving under the influence of Cannabis.
The Cannabis industry is flouring within the state at a high rate which is coming with its own set of risks and issues. The industry was initially deemed as an investment as good as gold. However, over the years it has become a commercial commodity. This has vastly decreased the profit margins. The demands and use have increased over the years.
The Cannabis industry needs to comply with a strict set of regulations. These include mindfulness over licensing, secure packaging and transportation, accurate labeling, and cultivation of the products to ensure quality. If these businesses are non-compliant they can face heft penalties and charges.
The cannabis industry is at risk of theft and burglaries at all times. These can cost millions of dollars worth of financial and reputation loss. Hence why having strong security measures are extremely important.
Cannabis is still illegal under Federal law. This brings up uncertainty for the security of the business itself. Moreover, financial institutes like banks are also hesitant to work with cannabis companies.
Overall there is still a stigma around the use of cannabis. In a concentrated market with a semi-negative public image, it’s difficult to let the company grow and flourish.
Types of Cannabis Insurance Coverage in Massachusetts
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 Massachusetts
Protecting your business from all angles helps create long-term opportunities and validate your dedication. Cannabis has unique struggles compared to other consumer products from not being federally regulated. We help empower you with our knowledge and relationships in the industry to help with your 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.
Benefits of Cannabis Insurance for Massachusetts 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.
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The cannabis industry in Massachusetts is legally required to have certain insurance to operate smoothly. The need to have aggregated general liability insurance for up to $2,000,000. You can check out the exact requirements for the number of coverages needed for these companies here. For each policy, there is a deductible of up to $5000.
All insurance at the very least should meet the State requirements. However, municipal bodies have the power to redefine these laws to higher requirements if needed.
- 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 Massachusetts
Cannabis Insurance in Massachusetts
Frequently Asked Questions
Cannabis insurance is customizable based on business needs. However, as per thestate laws of Massachusetts, the business needs to have insurance on general liabilities, product liabilities, property liability, and worker’s compensation for employee safety. Apart from these, you can also opt for protection against cyber threats, any unforeseen interruptions or officers’ and directors’ reputations, etc.
The insurance cost depends on the scope of the business and range from a few hundred dollars to tens of thousands of dollars. They’re not the cheapest but they do provide great value to the business. Insurance with premiums costs a lot more than basic and general insurance. The companies can contact insurance agents to get their quotes based on the needs of their company.
As a Cannabis business owner in Massachusetts, you are required to have certain insurance to operate. Some of them are general and product liabilities insurance, property insurance, and workers comp. It is important to take professional help to ensure your business has all the necessary coverage and complies with all the regulatory acts.
Just like all insurance claims, in case you need to use your insurance for any unfortunate scenario, contact your insurance provider. They will be able to guide you throughout the whole process. For the claim to be validated, you need to make sure you have enough proof and documentary evidence to support your claims. Always read up on your coverage limits and rights and go through the paperwork before signing anything. Get professional help from your lawyer or insurance agent if needed.