Cannabis Insurance
in New York
Since 2014, New York has been offering medical cannabis to state residents, it is now legal for recreational use, but the regulations for sales have not been finalized. Like all aspects of NY, the industry will be competitive. As the industry grows into its new recreational program and sets its rules, ensuring your business is safe in this fluid climate is essential.
Understanding the New York Cannabis Industry
Adults in New York State who are 21 years of age or older can now legally purchase cannabis, but the sales regulations are still a work in progress. New York made medical marijuana legal way back in 2014, but adult-use marijuana was legalized in March 2021.
In order to maintain the safety and health of the public, New York State is establishing a new cannabis industry. This industry will create opportunities, especially for neighborhoods hardest hit by excessive prosecution during the decades of cannabis “prohibition,” when the drug was illegal.
The legal framework developed by the Marijuana Regulation and Taxation Act (MRTA), which passed into law on March 31, 2021, and established the Cannabis Law, will serve as the foundation for this new industry.
The Cannabis Law ended the practice of treating cannabis from a regulatory or law enforcement angle and switched it with an emphasis on public health based on social equity, safety for people, and fair economic growth aimed at reducing the adverse effects of cannabis prohibition.
Overview of New York's Cannabis Market
With authorization and regulatory restrictions prior to the introduction of recreational use, New York may have been handed an unfavorable hand, but with an estimated population of 15 million adults aged 21 and over, the market is still anticipated to be the biggest income opportunity by 2023.
According to BDSA user research, New York’s percentage of most recent six-month consumers increased from 38% in Fall 2021 to 44% in Fall 2022. This fast consumer growth suggests that the public’s demand for cannabis won’t be a factor limiting the marketplace.
Regardless of all the problems building up to licensed sales of adult use, BDSA has predicted that the overall authorized sales in New York will hit $1.3 billion in 2023 and increase to about 2.7 billion dollars by 2027.
By 2026, New York will rank among the leading five US cannabis markets in terms of monetary sales.
New York Cannabis Laws and Regulations
Governor Andrew Cuomo approved the Marijuana Regulation and Taxation Act (MRTA) of New York in 2021, which pertains to adult use. The MRTA has legalized and regulated the consumption of marijuana by adults.
For New York residents three ounces of cannabis and twenty-four grams of potent cannabis are both legal amounts for possession and consumption.
You are allowed to keep no more than five pounds of cannabis at home if it is adequately protected.
The state of New York will allow a maximum of six plants to be grown indoors, but indoor cultivation won’t be allowed until 18 months have passed since the first commercial cannabis sale at dispensaries.
It is acceptable to consume marijuana anywhere that also allows tobacco consumption, but not in vehicles, educational institutions, or places of employment. Additionally, cannabis companies can send packages home from retail sites.
For weed producers, distributors, processors, product manufacturers, transportation services, dispensaries, and dealers, the MRTA also issues unique licenses.
Risks Faced by Cannabis Businesses in New York
Compared to other states that have legalized cannabis for adult use, New York’s suggested packing rules are pretty stringent.
The NYS laws and regulations, as they are currently stated and proposed, limit retail cannabis to only displaying a single brand and logo, with no photos, illustrations, or graphics aside from what is mandated by relevant government entities. This contrasts the safety and caution standards of all states that sell retail cannabis-related goods.
Additionally, an explicit prohibition is that packaging must not be made appealing to people under twenty-one. While this is a standard requirement in state laws, it has more stringent restrictions in NYS, including a ban on neon colors, specific fonts, and the usage of the words “candy” or “candies” or any variants.
With authorization and regulatory restrictions prior to the introduction of recreational use, New York may have been handed an unfavorable hand, but with an estimated population of 15 million adults aged 21 and over, the market is still anticipated to be the biggest income opportunity by 2023.
According to BDSA user research, New York’s percentage of most recent six-month consumers increased from 38% in Fall 2021 to 44% in Fall 2022. This fast consumer growth suggests that the public’s demand for cannabis won’t be a factor limiting the marketplace.
Regardless of all the problems building up to licensed sales of adult use, BDSA has predicted that the overall authorized sales in New York will hit $1.3 billion in 2023 and increase to about 2.7 billion dollars by 2027.
By 2026, New York will rank among the leading five US cannabis markets in terms of monetary sales.
Governor Andrew Cuomo approved the Marijuana Regulation and Taxation Act (MRTA) of New York in 2021, which pertains to adult use. The MRTA has legalized and regulated the consumption of marijuana by adults.
For New York residents three ounces of cannabis and twenty-four grams of potent cannabis are both legal amounts for possession and consumption.
You are allowed to keep no more than five pounds of cannabis at home if it is adequately protected.
The state of New York will allow a maximum of six plants to be grown indoors, but indoor cultivation won’t be allowed until 18 months have passed since the first commercial cannabis sale at dispensaries.
It is acceptable to consume marijuana anywhere that also allows tobacco consumption, but not in vehicles, educational institutions, or places of employment. Additionally, cannabis companies can send packages home from retail sites.
For weed producers, distributors, processors, product manufacturers, transportation services, dispensaries, and dealers, the MRTA also issues unique licenses.
Compared to other states that have legalized cannabis for adult use, New York’s suggested packing rules are pretty stringent.
The NYS laws and regulations, as they are currently stated and proposed, limit retail cannabis to only displaying a single brand and logo, with no photos, illustrations, or graphics aside from what is mandated by relevant government entities. This contrasts the safety and caution standards of all states that sell retail cannabis-related goods.
Additionally, an explicit prohibition is that packaging must not be made appealing to people under twenty-one. While this is a standard requirement in state laws, it has more stringent restrictions in NYS, including a ban on neon colors, specific fonts, and the usage of the words “candy” or “candies” or any variants.
Types of Cannabis Insurance Coverage in New York
There is a wide variety of plans to choose from when it comes to you and your New York 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 New York
A market with high competition means smaller margins, and securing long-term investments will provide the best long-term opportunities. From general liability to specific cannabis needs, we are here to help you mitigate risks and create opportunities to increase profitability. The global cybersecurity landscape is unsettling. Cannabis insurance works to reduce these risks.
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 New York 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.
No current legal insurance requiremnets. New York lawmakers have approved a bill that would require public health insurance providers in the state to include medical marijuana as a covered prescription drug and authorize private insurers to do the same.
The Assembly Health Committee passed the legislation from Majority Leader Crystal Peoples-Stokes (D) in an 18-7 vote on Tuesday. It now heads to the Ways & Means Committee before potentially advancing to the floor.
- 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 New York
Cannabis Insurance in New York
Frequently Asked Questions
Cannabis insurance is specifically designed to cover risks associated with the cannabis operation. This covers issues like theft, crop failure, and job accidents as well as accidents involving other people’s property, physical harm, and loss of property.
There are numerous policies to take into account; regardless of the sort of company, general liability insurance should be a standard. Others, like agricultural insurance, are only required if your company is in the farming or gardening industry.
Since cannabis involves risks and is classified as a schedule 1 regulated drug, the cost of cannabis insurance is higher than in other sectors. For instance, the annual cost of liability coverage can vary from a few hundred dollars to tens of thousands of dollars.
There are various types of insurance to consider—each with a unique range and price—and each is based on your particular circumstance and company strategy.
New York Cannabis insurance authorities don’t yet require Cannabis insurance but government entities are now asking insurance companies to do so. Therefore, as of now, insurance is not required by law.
Cannabis insurance in New York has not been launched yet. But to file a cannabis insurance claim in general, you 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, that is to be completed accurately and thoroughly.
Once you submit your claim, your insurance provider reviews the details and determines 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.