Cannabis Insurance
in Mississippi
When a state decides to legalize cannabis, either medical or recreational, the regulations are not always clear. Partnering to stay afloat in a regulated climate can maximize all risks to ensure profitability. In addition, we help cannabis company protect their assets for the long term.
Understanding the Mississippi Cannabis Industry
Only under the supervision of a licensed physician can one use cannabis, but that is only for medical purposes, that is when the patient is combating a serious life-threatening disease. Besides that, the state is yet to legalize the recreational use of cannabis.
The State Department of Health is currently in charge of overlooking the use of cannabis for medical purposes and is also in the process of developing certain rules and issuing relevant licenses for cultivators, dispensary owners, and distributors.
The legalization of cannabis for medical purposes in itself is a big milestone for the industry and is still in the early stages. Several efforts are being made to roll out programs regarding the recreational use of cannabis.
Overview of Mississippi's Cannabis Market
Since the recreational use of cannabis is yet to be legalized by the state of Mississippi, any estimate regarding the economic impact of the market is difficult to arrive at.
However, a study estimates that the state might be able to generate $265 million annually from the sales of cannabis, which is a pretty hefty amount. This revenue, however, is not only based on sales. The amount is also going to be part of tax revenue and other licensing costs.
Mississippi Cannabis Laws and Regulations
The biggest milestone itself is the legalization of medical cannabis. However, besides that, some other things to include are:
- At first possession of even small amounts of cannabis was considered a serious offense. However, after the 75% voter agreement the law received, the offense has been dialed down, and only a small amount of penalty has to be paid out in case you’re found to be in the company of cannabis.
- Rules and regulations revolving around the use of cannabis are being formed already with license applications to be accepted sooner than expected.
Risks Faced by Cannabis Businesses in Mississippi
Because the recreational use of cannabis is yet to be legalized, there are more risks to be catered to than if the case was reversed.
One of the most major risks to be faced by cannabis operators is the uncertainty surrounding the laws and regulations.
As the rules are still underway, business owners are open to any potential risks that may or may not have the ability to uproot their business and leave them with nothing. This uncertainty surrounding the situation can make it difficult for cannabis operators to plan and invest in the future.
Since the recreational use of cannabis is yet to be legalized by the state of Mississippi, any estimate regarding the economic impact of the market is difficult to arrive at.
However, a study estimates that the state might be able to generate $265 million annually from the sales of cannabis, which is a pretty hefty amount. This revenue, however, is not only based on sales. The amount is also going to be part of tax revenue and other licensing costs.
The biggest milestone itself is the legalization of medical cannabis. However, besides that, some other things to include are:
- At first possession of even small amounts of cannabis was considered a serious offense. However, after the 75% voter agreement the law received, the offense has been dialed down, and only a small amount of penalty has to be paid out in case you’re found to be in the company of cannabis.
- Rules and regulations revolving around the use of cannabis are being formed already with license applications to be accepted sooner than expected.
Because the recreational use of cannabis is yet to be legalized, there are more risks to be catered to than if the case was reversed.
One of the most major risks to be faced by cannabis operators is the uncertainty surrounding the laws and regulations.
As the rules are still underway, business owners are open to any potential risks that may or may not have the ability to uproot their business and leave them with nothing. This uncertainty surrounding the situation can make it difficult for cannabis operators to plan and invest in the future.
Types of Cannabis Insurance
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 Mississippi
Operating in a business and introducing a brand-new product isn’t supposed to be an easy transition. It requires attention to detail and complete focus. Therefore, you can’t possibly be worrying about a possible risk your business could be affected by or damage it can suffer. This is where an insurance provider comes in and takes that responsibility away from your shoulder by protecting your clients and business.
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 Mississippi Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Mississippi, 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.
Cannabis is currently illegal for both medicinal and recreational use in Mississippi, except for the limited use of CBD oil for certain medical conditions.
Once the program is implemented, commercial cannabis operators will need to meet certain legal requirements to operate within the state. These requirements may include obtaining a license from the Mississippi Department of Health, complying with security and packaging regulations, and ensuring that products are accurately labeled and tested for quality and potency.
It is also likely that operators will need to obtain insurance coverage, such as liability insurance, as well as comply with workers’ compensation requirements. As the medical cannabis program in Mississippi is still in development, the specific legal requirements for commercial operators may change over time.
- 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 Mississippi
Cannabis Insurance in Mississippi
Frequently Asked Questions
Cannabis insurance covers a range of areas when it comes to potential risks that are being posed at your business.
The insurance will usually cover product liability, general liability, property damage, theft, and of course crop loss for the cultivators. Besides these, the workers themselves are to be protected against any damage and this is usually done via workers’ compensation, directors’ and officers’ liability, cyber liability and the list goes on.
The specific coverage that you’ll receive will depend upon your business needs, protecting it from possible financial losses and whatnot.
If you’re a small business, the coverage required for your company will usually equal a few thousand dollars every year. If the size of your cannabis-based business is huge, the amount you’ll be paying in coverage is also going to be huge with possible millions as a starting outflow.
Factors besides size that can affect your coverage costs include the type of cannabis you’re going to sell and the amount of it, the location from where you selling, the amount of coverage required by the law, and the overall level of risk that’s involved while running the business.
Cannabis insurance is not yet required of business owners in Mississippi. However, it’s always recommended to stay on the safe side. What this does is that businesses will be able to protect themselves against potential financial losses, any case of an unexpected event, or legal claims against the company or the businesses’ clients themselves.
At times, to put down a lease agreement, it’s required by some areas to have some sort of insurance. If you don’t have any coverage, you might not get to make a future investment.
To file a cannabis insurance claim, carry out the following steps:
Notify the insurance provider of the claim as soon as you get the time. This is important because an insurance provider is going to help you out legally and make sure you get the most out of the situation.
Make sure you submit all the documentation when filing the claim. Documentation makes it likely for things to be in your favor.
The insurance provider will then assign an adjuster to you. This adjuster will skim through the documentation provided and make sure everything is in your favor before proceeding with the case.
Once everything has been set down in the clear, you’ll receive a settlement offer. After discussing it with your insurance provider, you can either protest against the offer or accept it.