Status: Recreational

Cannabis Insurance
in Missouri

The recreational cannabis industry is in the restart-up mode in Missouri, with new opportunities come unknown risks. Protecting your growing investment is a critical and long-term investment. With unique exposure to cannabis insurance, only the proper insurance can provide the security you need from employees to consumers.

Recreational
No Cannabis Program
Medical Only

Understanding the Missouri Cannabis Industry

Missouri legalized medical marijuana in 2018 and the use of recreational cannabis in 2022, becoming the 21st state to do so. The amendment to the Missouri state constitution that permits the medical use of cannabis was approved by voters in November 2018.

For medical cannabis, people who meet the requirements can apply for a card authorizing the use and purchase of marijuana for medical purposes. Currently, there are more than 200,000 registered patients in Missouri.

There have been significant issues with the medical marijuana program in Missouri, including delays in licensing and dispensary openings.

The recreational use was legalized in December 2022, allowing adult users to possess up to 3 ounces of cannabis. In addition, the sale and purchase of cannabis have also been legalized.

Some users might plan to keep on using their medical cannabis benefits as they will have to pay lower taxes compared to buying cannabis recreationally.

Overview of Missouri's Cannabis Market

Missouri has just joined the list of states that have legalized cannabis, and the cannabis market is showing great promise. Missouri state started approving licenses in February 2023. More than 200 dispensaries popped up, which made around $103 million in sales till March 2023. This is a staggering milestone in such a short amount of time.

The market is expected to reach $2.9 billion by 2030. This also means that this industry will pay an immense amount of taxes. Currently, there is a 4% tax on medical cannabis and a 6% tax on recreational cannabis, which can be increased by the municipalities.

Missouri Cannabis Laws and Regulations

In 2015, Missouri took another step towards cannabis freedom and issued licenses to two non-profits to grow cannabis to be sold to registered patients.

In 2017, possession of up to 35 grams of cannabis was decriminalized and charged as a civil offense instead of a misdemeanor, with a fine of up to $25.

In 2018, medical cannabis was legalized under amendment 2, and in the following year, the state of Missouri started accepting applications for medical marijuana businesses, which included dispensaries, manufacturers, and cultivators.

Finally, in late 2022, recreational use was legalized, allowing adult users to grow up to 6 plants at home and possess up to 3 ounces of cannabis products.

In 2023, sales for recreational cannabis started and earned a huge sum within a month.

Risks Faced by Cannabis Businesses in Missouri

With the legalization of recreational cannabis, hundreds of dispensaries across Missouri have opened their doors to adult customers. However, cannabis businesses still face many risks and problems.

Access to limited banking is one of the numerous issues that cannabis businesses must deal with. Obtaining loans or credits is difficult since banks are reluctant to work with cannabis firms because it is banned on the federal level.

The cannabis regulatory framework in Missouri is another aspect. Cannabis businesses may have trouble complying with tight standards and codes. Failure to comply might lead to penalties, license revocation, and suspension, which could endanger the viability of cannabis enterprises.

Cannabis businesses also suffer from restrictions on tax deductions. Cannabis firms are not entitled to conventional tax deductions, including employee salary, rent, and utility costs, because of federal tax law 280E.

The federal government has taken a casual attitude toward legalizing cannabis in the US. However, there are still concerns about legal ambiguities due to the drug’s unlawful status on a federal level.

Last but not least, there is always the worry that cannabis is a valuable commodity that is easily stolen. This presents security issues related to cannabis product sales and operations. In several states where cannabis sales are legal, robberies and break-ins have been reported.

Missouri has just joined the list of states that have legalized cannabis, and the cannabis market is showing great promise. Missouri state started approving licenses in February 2023. More than 200 dispensaries popped up, which made around $103 million in sales till March 2023. This is a staggering milestone in such a short amount of time.

The market is expected to reach $2.9 billion by 2030. This also means that this industry will pay an immense amount of taxes. Currently, there is a 4% tax on medical cannabis and a 6% tax on recreational cannabis, which can be increased by the municipalities.

In 2015, Missouri took another step towards cannabis freedom and issued licenses to two non-profits to grow cannabis to be sold to registered patients.

In 2017, possession of up to 35 grams of cannabis was decriminalized and charged as a civil offense instead of a misdemeanor, with a fine of up to $25.

In 2018, medical cannabis was legalized under amendment 2, and in the following year, the state of Missouri started accepting applications for medical marijuana businesses, which included dispensaries, manufacturers, and cultivators.

Finally, in late 2022, recreational use was legalized, allowing adult users to grow up to 6 plants at home and possess up to 3 ounces of cannabis products.

In 2023, sales for recreational cannabis started and earned a huge sum within a month.

With the legalization of recreational cannabis, hundreds of dispensaries across Missouri have opened their doors to adult customers. However, cannabis businesses still face many risks and problems.

Access to limited banking is one of the numerous issues that cannabis businesses must deal with. Obtaining loans or credits is difficult since banks are reluctant to work with cannabis firms because it is banned on the federal level.

The cannabis regulatory framework in Missouri is another aspect. Cannabis businesses may have trouble complying with tight standards and codes. Failure to comply might lead to penalties, license revocation, and suspension, which could endanger the viability of cannabis enterprises.

Cannabis businesses also suffer from restrictions on tax deductions. Cannabis firms are not entitled to conventional tax deductions, including employee salary, rent, and utility costs, because of federal tax law 280E.

The federal government has taken a casual attitude toward legalizing cannabis in the US. However, there are still concerns about legal ambiguities due to the drug’s unlawful status on a federal level.

Last but not least, there is always the worry that cannabis is a valuable commodity that is easily stolen. This presents security issues related to cannabis product sales and operations. In several states where cannabis sales are legal, robberies and break-ins have been reported.

Types of Cannabis Insurance Coverage in Missouri

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

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Choosing the Right Cannabis Insurance Policy in Missouri

With new regulations, maintaining operational liabilities from the grassroots means mitigating risks. The fact that states have different laws makes the rules far harder to navigate than regular consumer products. Plus, the global cybersecurity landscape is unsettling. Therefore, we can partner with any part of the industry to help protect all assets.

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AlphaRoot Badge Working with an Experienced Cannabis Insurance Broker

AlphaRoot

AlphaRoot is a full service insurance brokerage that focuses exclusively in the cannabis, hemp, 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

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Benefits of Cannabis Insurance for Missouri Businesses

AlphaRoot is licensed to provide cannabis insurance coverage throughout Missouri, 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.

Find the legal insurance requirements for each state. The link below will have the fist few that we are doing. 

https://cdn2.hubspot.net/hubfs/790303/NCIA%20Committee%20White%20Papers/FIC_InsuranceRequirementsFinal_digital.pdf

  • MSO’s 
  • Dispensaries 
  • Lab Testing 
  • Cultivation 
  • Investment Funds 
  • Manufacturing 
  • Distribution 
  • Technology 
  • Psychedelics 
  • Brands Service 
  • Providers
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Getting a Quote for Cannabis Insurance in Missouri

Cannabis Insurance in Missouri
Frequently Asked Questions

A variety of potential dangers that your cannabis firm can encounter are mitigated by cannabis insurance. In the face of these dangers, it aids in your continued safety and security. These dangers may be related to issues with cannabis product production, processing, and distribution.

Your insurance plan can cover damages brought on by fires, natural disasters, property damage, consumer and employee liability, and theft.

One of the underappreciated benefits of insurance is that it may protect you from hacking and data breaches that could expose private financial and customer information.

Your cannabis insurance price will vary depending on the extent of coverage, the size of your company, the region in which it is located, and the risks involved in running a cannabis business.

Plans for cannabis insurance protection can range in price from a few hundred dollars for small enterprises to thousands of dollars for bigger ones. So, a significant factor in determining the cost of insurance is the firm’s size.

Cannabis insurance is often more costly than other insurance. Due to cannabis being illegal at the federal level, these risks also include legal uncertainty.

There are no official regulations for cannabis insurance in Missouri. Even though the state does not mandate insurance, it is strongly advised that anyone operating a cannabis business obtain cannabis insurance.

Cannabis insurance offers businesses that deal with cannabis peace of mind as well as protection against hazards associated with operating a cannabis shop. Instead of worrying about potential risks, you can concentrate on creating and offering high-quality goods and services. Cannabis insurance makes sure you are covered for risks and liabilities.

Claiming cannabis insurance is identical to claiming regular insurance. Contact your insurance agent immediately if you suffer any loss or damage that is covered by your insurance policy. You must supply all pertinent details, including the fundamentals, like the incident’s date and time and supporting documentation.

Take pictures and videos of the incident and the damage you sustained to compile enough proof for a settlement. Provide any other essential records and receipts required by your insurance policy.

You will be presented with a settlement offer concerning your insurance claim when the investigation has been evaluated and concluded. Review this offer and discuss its fairness and appropriateness with your insurance agent.