Cannabis Insurance
in Minnesota
The regulations surrounding Minnesota’s hemp and medical cannabis industry are strict and unyielding. Therefore, it’s crucial for operating businesses to be protected from any potential liability and maintain their success while avoiding cannabis-related risks.
Understanding the Minnesota Cannabis Industry
The state of Minnesota legalized the cannabis industry back in 2014, making it the 22nd state to do so. Under the legalization, patients that qualify for PTSD, cancer, and seizure disorders, in order to purchase the cannabis needed from the operators.
The production, distribution, and normal use of cannabis are strictly prohibited. Under medical use, one can only purchase the non-smokable form, which can include pills, vaporizers, and oils.
Even though a bill was recently passed for the recreational use of cannabis, it’s yet to be implemented and is being subjected to the regulatory licensing processes.
Overview of Minnesota's Cannabis Market
The most recent recording of Minnesota’s cannabis market equaled $100 million annually along with 20,000 registered patients.
This amount is only expected to see a significant increase due to the recent legalization of cannabis for recreational use.
According to an estimate carried out by the cannabis department, the annual sales are expected to increase from $100 million to $300 million and the jobs to be created with this opportunity equal to thousands.
Because the industry has the potential to be a significant contributor towards tax revenue as is the case with other states such as California and Colorado, the claims of supporters outweigh the negatives.
Minnesota Cannabis Laws and Regulations
When talking about Minnesota, has one of the most restrictive regulations regarding the use of cannabis. These include:
- Qualifying conditions: These cover all the set of conditions that a person needs to possess in order to qualify for the purchase of cannabis. Therefore, if you have cancer, HIV, Tourette syndrome, or a set of other diseases, you can easily access the drug.
- Restriction on home cultivation: The production of cannabis is not only restricted at the industry level but also at the domestic level too. Therefore, unless you want to have severe legal action taken against you, don’t plant any cannabis in your garden.
Risks Faced by Cannabis Businesses in Minnesota
When talking about risks associated with setting up a cannabis business, the list is endless. If one names them, on top of the list we have high taxes, limited or sometimes no access to banking services, and regulatory challenges.
As state after state is set on legalizing cannabis, the competition for these businesses is higher than ever. So, not only do cannabis operators have to worry about regulatory action but also a competitive market along with shifting market demand and customer needs.
But it’s not a completely grave situation, as the door for this industry is also opening. For instance, opportunities for growth and innovation are now increasing in the processing and retail sector of the industry.
The most recent recording of Minnesota’s cannabis market equaled $100 million annually along with 20,000 registered patients.
This amount is only expected to see a significant increase due to the recent legalization of cannabis for recreational use.
According to an estimate carried out by the cannabis department, the annual sales are expected to increase from $100 million to $300 million and the jobs to be created with this opportunity equal to thousands.
Because the industry has the potential to be a significant contributor towards tax revenue as is the case with other states such as California and Colorado, the claims of supporters outweigh the negatives.
When talking about Minnesota, has one of the most restrictive regulations regarding the use of cannabis. These include:
- Qualifying conditions: These cover all the set of conditions that a person needs to possess in order to qualify for the purchase of cannabis. Therefore, if you have cancer, HIV, Tourette syndrome, or a set of other diseases, you can easily access the drug.
- Restriction on home cultivation: The production of cannabis is not only restricted at the industry level but also at the domestic level too. Therefore, unless you want to have severe legal action taken against you, don’t plant any cannabis in your garden.
When talking about risks associated with setting up a cannabis business, the list is endless. If one names them, on top of the list we have high taxes, limited or sometimes no access to banking services, and regulatory challenges.
As state after state is set on legalizing cannabis, the competition for these businesses is higher than ever. So, not only do cannabis operators have to worry about regulatory action but also a competitive market along with shifting market demand and customer needs.
But it’s not a completely grave situation, as the door for this industry is also opening. For instance, opportunities for growth and innovation are now increasing in the processing and retail sector of the industry.
Types of Cannabis Insurance Coverage in Minnesota
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 Minnesota
Achieving success in a competitive cannabis industry doesn’t come easy. While navigating through the industry, you also have to focus on protecting your employees, clients, and the business against potential danger. However, the case isn’t completely hopeless. We provide our clients with sufficient support that allows them to run their businesses without worrying about anything else.
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 ChoSosing 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 Minnesota Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Minnesota, 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.
Minnesota legalized medical cannabis in 2014, and the state has a highly regulated medical cannabis program. To operate as a commercial cannabis operator in Minnesota, operators must obtain a license from the Minnesota Department of Health and comply with strict regulations for security, testing, packaging, and labeling.
Operators must also obtain insurance coverage, such as liability insurance, and comply with workers’ compensation requirements. In addition, the state may require additional insurance coverage specific to the cannabis industry.
The Minnesota Department of Health also requires that all medical cannabis products be tested by an approved laboratory for quality and potency, and that all testing results be reported to the department. Operators must also maintain detailed records of their operations and comply with regular inspections and audits by the department.
- 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 California
Cannabis Insurance in Minnesota
Frequently Asked Questions
The range of risks associated with the cannabis industry includes workers’ compensation, property damage or theft, and product liability and all of these will be covered by cannabis insurance. At times, the coverage may also pay for all the expenses related to lawsuits, and regulatory actions, but this is not always the case.
For dispensary and store owners, cannabis insurance will usually cover customer injuries, inventory loss, and employee theft.
As the industry continues to expand and climb up the ladder, we’ll see the introduction of more specialized products which will require insurance coverage for cyber risks and other advanced problems.
The typical premium cost for insurance coverage can be as low as a few hundred dollars and this can as high as $100,000 or even more, all depending upon the risk in question. This cost will be affected by the size of the business operation, where it is located, and the coverage that one is going for.
Your history of compliance issues and compilations also affects the cost of the coverage you’re going for. There’s no need to worry if you’re working with a capable insurance provider as they’re more than able to get you a competitive price that’s in your favor.
Even though cannabis has been legalized for both recreational and medicinal use in Minnesota, no specific law has been passed requiring these operators to go for insurance. However, insurance will be required at certain places as you move up the business ladder. For instance, in order to obtain a certain license or permit, the need for insurance coverage will be of utmost importance.
And, in order to protect the workers in case of an injury at the workplace, insurance coverage can be important for a lot of cannabis operators.
To file a cannabis insurance claim in Minnesota, carry out the following steps:
- As soon as the claim arises, contact your insurance provider to begin the process of filing the claim.
- It’s of utmost importance to take as many photos as you can for documentation. Besides the photos, if possible, go for statements and any other relevant information that might help your case. All of this evidence helps in expediting the claim process to a great extent.
- Cooperation with the insurance adjuster is a significant act to perform. This adjuster will determine the amount of insurance you’re entitled to. Therefore, work closely with them and provide them with any sort of additional information.
- Review your settlement offer and accept the settlement offer if you think it perfectly covers the damage that had taken place.