Cannabis Insurance
in Nevada
Paying the way in many fluid and risk-filled markets, Nevada has an active cannabis industry. Ensuring your company on risk in a competitive market is a great gamble. Only insurance calibrated to the cannabis industry can measure up to the challenges.
Understanding the Nevada Cannabis Industry
Nevada approved marijuana for medicinal use in 2001 and adult use in 2017. The legislation governing medicinal marijuana is defined in Chapter 453A – Medical Use of Marijuana. The Regulation and Taxation of Marijuana Act permits the use of marijuana for adult use.
The Nevada Department of Health and Human Services is responsible for controlling cannabis business operations.
Cannabis Insurance in Nevada was a significant development that helped shape the industry’s future as it continues to expand and change. Cannabis businesses in Nevada can now obtain insurance coverage for their operations, which was previously a challenge due to the industry’s status as a Schedule I drug under Federal law.
Overview of Nevada's Cannabis Market
The cannabis market in Nevada saw $700 million in revenue through October 2022.
However, In August 2022, the combined recreational and medical cannabis retail sales were $67.6 million. These August 2022 sales of $65.7 million fell by 6.4% from July 2022 adult-use sales of $61.9 million. The sales were also down 22.4% from August 2021 sales of $79.5 million. This data shows a decreasing trend in cannabis sales over the years in Nevada.
Statistics show a forecast increase from 0.8 percent in 2016 to 3.4 percent in 2025 for Nevada’s share of the total U.S. legal cannabis market. Currently, the total market share is at 3.6% of the economy.
Nevada Cannabis Laws and Regulations
Nevada’s cannabis laws and regulations for adult use require the individual to be at least 21 years old. You can purchase cannabis legally from an authorized seller in Nevada.
It’s illegal for these licensed businesses to supply marijuana to individuals under 21 years of age. It’s also illegal to use marijuana and drive.
It’s prohibited for the production of marijuana to be visible to the naked eye from a public area.
Licenses for medical marijuana facilities such as dispensaries, independent testing labs, growing facilities, manufacturing facilities, and other locations are available. A candidate must submit an application and pay the required amount in order to receive a certificate.
The Nevada Cannabis Compliance Board passed rules governing the licensure and management of consumption bars where people can use cannabis for recreational purposes on June 28, 2022, with support from all sides.
Risks Faced by Cannabis Businesses in Nevada
Cannabis companies face uncertainty and risks due to the changing cannabis laws and rules of the state. Nevada’s lack of licensed producers and dispensaries has led to high demand for authorized facilities and a rise in cannabis prices.
Additionally, companies in Nevada face risks as a result of the federal government’s failure to recognize the marijuana industry. These companies have restricted access to banking and financial services, which makes them more susceptible to theft and problems with currency management.
The cannabis market in Nevada saw $700 million in revenue through October 2022.
However, In August 2022, the combined recreational and medical cannabis retail sales were $67.6 million. These August 2022 sales of $65.7 million fell by 6.4% from July 2022 adult-use sales of $61.9 million. The sales were also down 22.4% from August 2021 sales of $79.5 million. This data shows a decreasing trend in cannabis sales over the years in Nevada.
Statistics show a forecast increase from 0.8 percent in 2016 to 3.4 percent in 2025 for Nevada’s share of the total U.S. legal cannabis market. Currently, the total market share is at 3.6% of the economy.
Nevada’s cannabis laws and regulations for adult use require the individual to be at least 21 years old. You can purchase cannabis legally from an authorized seller in Nevada.
It’s illegal for these licensed businesses to supply marijuana to individuals under 21 years of age. It’s also illegal to use marijuana and drive.
It’s prohibited for the production of marijuana to be visible to the naked eye from a public area.
Licenses for medical marijuana facilities such as dispensaries, independent testing labs, growing facilities, manufacturing facilities, and other locations are available. A candidate must submit an application and pay the required amount in order to receive a certificate.
The Nevada Cannabis Compliance Board passed rules governing the licensure and management of consumption bars where people can use cannabis for recreational purposes on June 28, 2022, with support from all sides.
Cannabis companies face uncertainty and risks due to the changing cannabis laws and rules of the state. Nevada’s lack of licensed producers and dispensaries has led to high demand for authorized facilities and a rise in cannabis prices.
Additionally, companies in Nevada face risks as a result of the federal government’s failure to recognize the marijuana industry. These companies have restricted access to banking and financial services, which makes them more susceptible to theft and problems with currency management.
Types of Cannabis Insurance Coverage in Nevada
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 Nevada
Cannabis insurance works to mitigate these risks, enabling companies to stay on the path to profitability. Maintaining those operational business risks with employees, cultivation, distribution, and cyber security can be vital to long-term success. Plus, the global cybersecurity landscape is unsettling.
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 Nevada Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Nevada, 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.
All business owners, whether they are in the cannabis industry or not, who have one or more workers in the State of Nevada are required by law to acquire and keep workers’ compensation insurance.
Drivers for authorized marijuana transporters are also required to carry evidence of current automobile insurance coverage in their vehicle at all times, as well as an amount adequate to cover any claim that might be made against them.
- 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 Nevada
Cannabis Insurance in Nevada
Frequently Asked Questions
Cannabis insurance usually covers cannabis-related risk factors such as property damage, general liability, product liability, crop coverage, and others. Some plans also cover cyber liability, business errors, and instrument failure.
Due to the risks involved with cannabis and its classification as a schedule 1 restricted drug on a Federal level, cannabis insurance rates are higher than those in other businesses. For example, the yearly cost of liability coverage can vary from a few hundred dollars to tens of thousands of dollars.
The Cannabis Compliance Board of the state of Nevada currently has no insurance or bond requirements. However, due to the risky nature of the business, it’s recommended to have some sort of insurance for your cannabusinesses.
To file a cannabis insurance claim in Nevada, you should start by contacting your insurance provider and informing them of the incident that led to the claim. They will likely provide you with a claims form to fill out, which you should complete accurately and thoroughly.
Once you have submitted your claim, your insurance provider will review the details and determine whether it is covered under your policy. If your claim is approved, they will work with you to process the claim and provide any necessary compensation.