Cannabis Insurance
in North Dakota
The cannabis industry is ever-changing and has many layers of regulations. Navigating these regulations and ensuring your business for long-term success is our passion. Being insured is a great idea to keep your business safe.
Understanding the North Dakota Cannabis Industry
Currently, it is illegal to use cannabis recreationally in North Dakota. However, medical cannabis was legalized in 2016, with a long list of medical issues that can qualify patients for the use and purchase of medical marijuana.
There are over 9000 registered medical marijuana users in North Dakota, with just eight state-authorized dispensaries and two producers state-wide. All this has been made possible through the North Dakota medical marijuana program. Patients can legally obtain up to 3 ounces of cannabis through the limited dispensaries available.
Possession of cannabis for recreational purposes is decriminalized. Possessing less than half an ounce is considered a criminal infraction with fines of up to $1000. Possession of anything more is considered a misdemeanor and comes with prison time and fines, depending on the amount possessed. Consuming cannabis and its products is also charged as a misdemeanor.
North Dakota has very well-defined and strict laws to control cannabis use. Cannabis products like Hash and concentrates have also been criminalized, with heavy fines and incarceration.
Overview of North Dakota's Cannabis Market
Since only the purchase, sale, and possession of medical cannabis is legalized, North Dakota only has a medical cannabis market. This market is limited and strictly regulated. People who hold a medical marijuana card are allowed to buy from the eight authorized dispensaries in the state.
Even in this market, sales of certain products like medical cannabis edibles are also banned. This limits the revenue the industry makes, which is minimal. It is estimated that the market will be worth well over $1 billion if recreational cannabis is legalized.
North Dakota Cannabis Laws and Regulations
Despite having some of the strictest cannabis laws in the country, North Dakota has come a long way in its journey of cannabis legalization. Medical marijuana was legalized in 2016, under the statutory ‘Measure 5’. This is also called the North Dakota Compassionate Act, allowing patients with certain diseases to purchase and use up to 3 ounces of medical cannabis products.
Possession of small amounts of cannabis products (less than half an ounce) was decriminalized in 2019, changing the misdemeanor to a criminal infraction. Possession still has a hefty fine attached to it.
In 2019, hemp production was also legalized, allowing farmers to cultivate and process hemp for industrial and commercial use. CBD oil has also been legalized, with the sale of CBD oils containing less than 0.3% THC being authorized by the state of North Dakota.
There have been multiple ballots and bills proposed to legalize the recreational use of cannabis. Many movements such as Legalize ND have tried to get recreational cannabis legalized but failed.
Risks Faced by Cannabis Businesses in North Dakota
The only cannabis business that is permitted in North Dakota is the medicinal marijuana industry. Like any other business, the medical marijuana market faces a number of hazards and restrictions.
The medical cannabis market in North Dakota is very small compared to other states. This means low demand for businesses dealing in medical marijuana. This is also because cannabis has a negative perception in North Dakota, which is why many people do not opt for cannabis therapy.
Federal legislation is responsible for governing the banking system. Working with cannabis businesses might have legal ramifications because cannabis is still illegal at the federal level, which is why many banks are reluctant to do so. This limits the industry’s ability to grow to its fullest potential and jeopardizes the North Dakota cannabis market.
The application of tax deductions is another drawback. Cannabis firms incur considerable tax-related costs since they are unable to deduct their costs because cannabis is illegal according to the federal government.
Due to the high value of the items, managing a cannabis business always carries the danger of theft, regardless of the state the firm is based. Robberies and break-ins have been recorded in other states with legalized recreational marijuana.
The North Dakota medical marijuana market is also subject to stringent restrictions and regulations, which creates hurdles for these enterprises and hinders the industry’s growth.
Since only the purchase, sale, and possession of medical cannabis is legalized, North Dakota only has a medical cannabis market. This market is limited and strictly regulated. People who hold a medical marijuana card are allowed to buy from the eight authorized dispensaries in the state.
Even in this market, sales of certain products like medical cannabis edibles are also banned. This limits the revenue the industry makes, which is minimal. It is estimated that the market will be worth well over $1 billion if recreational cannabis is legalized.
Despite having some of the strictest cannabis laws in the country, North Dakota has come a long way in its journey of cannabis legalization. Medical marijuana was legalized in 2016, under the statutory ‘Measure 5’. This is also called the North Dakota Compassionate Act, allowing patients with certain diseases to purchase and use up to 3 ounces of medical cannabis products.
Possession of small amounts of cannabis products (less than half an ounce) was decriminalized in 2019, changing the misdemeanor to a criminal infraction. Possession still has a hefty fine attached to it.
In 2019, hemp production was also legalized, allowing farmers to cultivate and process hemp for industrial and commercial use. CBD oil has also been legalized, with the sale of CBD oils containing less than 0.3% THC being authorized by the state of North Dakota.
There have been multiple ballots and bills proposed to legalize the recreational use of cannabis. Many movements such as Legalize ND have tried to get recreational cannabis legalized but failed.
The only cannabis business that is permitted in North Dakota is the medicinal marijuana industry. Like any other business, the medical marijuana market faces a number of hazards and restrictions.
The medical cannabis market in North Dakota is very small compared to other states. This means low demand for businesses dealing in medical marijuana. This is also because cannabis has a negative perception in North Dakota, which is why many people do not opt for cannabis therapy.
Federal legislation is responsible for governing the banking system. Working with cannabis businesses might have legal ramifications because cannabis is still illegal at the federal level, which is why many banks are reluctant to do so. This limits the industry’s ability to grow to its fullest potential and jeopardizes the North Dakota cannabis market.
The application of tax deductions is another drawback. Cannabis firms incur considerable tax-related costs since they are unable to deduct their costs because cannabis is illegal according to the federal government.
Due to the high value of the items, managing a cannabis business always carries the danger of theft, regardless of the state the firm is based. Robberies and break-ins have been recorded in other states with legalized recreational marijuana.
The North Dakota medical marijuana market is also subject to stringent restrictions and regulations, which creates hurdles for these enterprises and hinders the industry’s growth.
Types of Cannabis Insurance Coverage in North Dakota
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 North Dakota
Cannabis businesses are dependent on the cultivation of the cannabis plant, much like any other farming business. The operations related to the cultivation, processing, and sale of cannabis come with a number of liabilities such as environmental risks, consumer risks, and general liabilities.
Navigating the fluidity of regulations in the industry means finding a partner that understands the specific needs of cannabis. We help protect your assets for long-term success. We know your particular needs from general liability, employee, or even cultivators insurance.
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 North Dakota Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout North Dakota , 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.
North Dakota requires all businesses to have workers’ compensation and commercial auto insurance.
North Dakota’s minimum requirements for auto-liability insurance are $25,000 per person/ $50,000 per accident for bodily injury liability, $25,000 per accident for property damage liability, $25,000 per person / $50,000 per accident for uninsured motorist coverage, and $30,000 per person for personal injury protection.
If you want to open a dispensary in North Dakota, you will have to pay a non-refundable application fee of $5000 and a licensing fee of $90,000.
- 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 North Dakota
Cannabis Insurance in North Dakota
Frequently Asked Questions
Cannabis insurance protects your company from the risks associated with producing, manufacturing, and delivering your products. The coverage and policies are dictated by the size of the cannabis business you wish to insure, as well as the state’s legal limits.
Among the several risks for which cannabis insurance may provide coverage are fires, natural catastrophes, product liability, property damage, workers’ compensation, and theft.
Another advantage is the availability of cannabis insurance to safeguard you from threats like financial or consumer information breaches caused by hackers.
Cannabis insurance costs vary based on the extent of coverage provided by your plan, the size of the organization, its location, and other potential dangers connected with activities that may or may not be unique to your area.
Cannabis insurance may cost anything from a few hundred to tens of thousands of dollars. Because cannabis firms face a number of risks, cannabis insurance may be more expensive than other forms of business insurance coverage.
In North Dakota, medical marijuana businesses are not required by law to obtain cannabis insurance. However, cannabis insurance is strongly advised for every business that sells cannabis products.
The peace of mind and security that comes with having cannabis insurance allows cannabis businesses to focus only on raising profits and providing superior products, rather than becoming distracted by the risks connected with running a cannabis business.
You may make a cannabis claim in the same way as you would any other insurance claim. To file a claim, you must contact your cannabis insurance provider. Your claim will then be lodged and confirmed based on the evidence you have about the occurrence.
It is always required to review your insurance policy to see whether the claim is covered by your insurance company.