Cannabis Insurance
in Ohio
Twenty-one conditions are approved for medical use based on Ohio regulations. To stay afloat in a regulated climate, you can maximize all risks to ensure profitability. In addition, we help cannabis companies protect their assets for the long term.
Understanding the Ohio Cannabis Industry
Ohio State has remained firm on its ban on recreational cannabis in the state. They only recently legalized medical marijuana for the treatment of specific medical concerns in 2016.
House Bill 525 was a monumental move that removed the penalty for prescribed medical use of cannabis by Ohio-licensed physicians. Currently, medical marijuana dispensaries are operating in the state under strict government rules of a 45-day fill period for patients.
Medical use is only allowed for patients above 18 years of age, with a carry limit of one whole-day unit.
Overview of Ohio's Cannabis Market
Legal medical marijuana sales were introduced in 2018, after which the total sales revenue reached $1 Billion in September 2022.
Currently, an estimated 300,000 registered patients in Ohio, of which nearly half have active prescriptions for medical cannabis. These numbers are a testament to the mass potential of cannabis revenue Ohio residents can also generate in other circumstances.
After demands of legalizing recreational cannabis caught speed, research carried out found that Ohio state could generate a generous amount through its taxation. An annual estimate presented (post five years of operation) was anywhere between $276 to $374 million, which could potentially be higher based on the public’s response.
Considering Ohio’s strict regulations for medical users, even expansion in the medical market could lead to greater revenue and more opportunities.
Ohio Cannabis Laws and Regulations
The state of Ohio has seen great efforts by citizens and legislators to pave the way for legalized cannabis; however, there’s still a long way to go.
The state legalized medical marijuana in 2016, and its sales began as late as 2019. The medical market has tremendously grown since, but there remains room for great improvement. The market has expanded with an additional 70 licenses provided on a lottery basis in 2022, a positive sign from the government.
Currently, a set list of illnesses has been permitted treatment through cannabis. Senate Bill 204 expanded the list of qualifying medical conditions in 2022. Citizens are now hoping for doctors (approved by the State Board of Ohio) to prescribe medical marijuana to any case they deem fit eventually. However, this plea is yet to be taken forward.
In the case of recreational cannabis, the citizens are expecting action soon. The first attempt at legalizing adult use of cannabis was in 2015, which Ohioans voted on. 65% of voters went against the legalization of cannabis, but recent polls show a different trend.
In recent developments, the Coalition to Regulate Marijuana Like Alcohol has been making an effort for Ohio citizens. The State House rejected their first attempt. However, they pursued legal action and filed a lawsuit against the decision. They expect to pursue legalization again in 2023 as part of the settlement.
Finally, if the state takes no action toward a ballot by May 2023, then the coalition aims to put the law up for voting in November 2023.
Risks Faced by Cannabis Businesses in Ohio
The medical marijuana market is constantly growing, with recent expansions boosting the industry. However, the sales for recreational cannabis have a long wait ahead of them.
Although licenses for medical sales are also limited, they are experiencing a growth trend due to public demand.
The biggest challenge faced by dispensaries is handling the money flow.
The industry earned billions within the first few years of operation, and businesses were at a loss of how they should handle the income. Not only is there a legal logistical threat, but also that of public safety as free cash moves around. The problem is only expected to grow with the number of licensed dispensaries.
Legal medical marijuana sales were introduced in 2018, after which the total sales revenue reached $1 Billion in September 2022.
Currently, an estimated 300,000 registered patients in Ohio, of which nearly half have active prescriptions for medical cannabis. These numbers are a testament to the mass potential of cannabis revenue Ohio residents can also generate in other circumstances.
After demands of legalizing recreational cannabis caught speed, research carried out found that Ohio state could generate a generous amount through its taxation. An annual estimate presented (post five years of operation) was anywhere between $276 to $374 million, which could potentially be higher based on the public’s response.
Considering Ohio’s strict regulations for medical users, even expansion in the medical market could lead to greater revenue and more opportunities.
The state of Ohio has seen great efforts by citizens and legislators to pave the way for legalized cannabis; however, there’s still a long way to go.
The state legalized medical marijuana in 2016, and its sales began as late as 2019. The medical market has tremendously grown since, but there remains room for great improvement. The market has expanded with an additional 70 licenses provided on a lottery basis in 2022, a positive sign from the government.
Currently, a set list of illnesses has been permitted treatment through cannabis. Senate Bill 204 expanded the list of qualifying medical conditions in 2022. Citizens are now hoping for doctors (approved by the State Board of Ohio) to prescribe medical marijuana to any case they deem fit eventually. However, this plea is yet to be taken forward.
In the case of recreational cannabis, the citizens are expecting action soon. The first attempt at legalizing adult use of cannabis was in 2015, which Ohioans voted on. 65% of voters went against the legalization of cannabis, but recent polls show a different trend.
In recent developments, the Coalition to Regulate Marijuana Like Alcohol has been making an effort for Ohio citizens. The State House rejected their first attempt. However, they pursued legal action and filed a lawsuit against the decision. They expect to pursue legalization again in 2023 as part of the settlement.
Finally, if the state takes no action toward a ballot by May 2023, then the coalition aims to put the law up for voting in November 2023.
The medical marijuana market is constantly growing, with recent expansions boosting the industry. However, the sales for recreational cannabis have a long wait ahead of them.
Although licenses for medical sales are also limited, they are experiencing a growth trend due to public demand.
The biggest challenge faced by dispensaries is handling the money flow.
The industry earned billions within the first few years of operation, and businesses were at a loss of how they should handle the income. Not only is there a legal logistical threat, but also that of public safety as free cash moves around. The problem is only expected to grow with the number of licensed dispensaries.
Types of Cannabis Insurance Coverage in Ohio
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 Ohio
Protecting your business means you need a pathway to success. Unlike other industries, protecting your business from every aspect, from employees to general liability, can help you have peace of mind. We help cannabis experts ensure their long time. As Ohio grows with its regulations, partnering with a team with expertise in the industry will increase long-term success.
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 Ohio Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Ohio, 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.
In order to open a medical marijuana dispensary in Ohio, there are certain initial investments. The application fee is $5000, the licensure fee is $80,000, and the renewal fee is also $80,000. Additionally, a $50,000 Medical Marijuana Dispensary License Surety Bond is mandatory for all dispensaries to protect their business.
Ohio doesn’t have specific insurance laws for the cannabis business due to the lack of a general market. However, medical dispensaries should follow requirements set for all companies. All businesses with employees must have Workers’ Compensation Insurance and Commercial Auto Coverage.
As Ohio law prohibits private insurance for businesses, you should either self-insure or opt for the state’s insurance fund.
- 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 Ohio
Cannabis Insurance in Ohio
Frequently Asked Questions
A reliable cannabis insurance premium combines different policies that protect your establishment’s essential components. These policies aid in defending your company against a range of common and novel issues, which could be expected or unexpected.
Your policy can protect you against customer complaints, theft, harm to company equipment or property, and litigations. You should select insurance that will prevent your company from suffering significant financial losses as a result of such issues.
Every business insurance in Ohio is overlooked by the Ohio Department of Insurance (DOI). The prices are also controlled and kept competitive by the department.
Your chosen policy determines the price you’ll pay for it, but generally it’s anywhere between a few hundred dollars to tens of thousands of dollars depending on your business requirements.
The minimum cost includes mandatory Workers’ Compensation and Commercial Auto policies coverage. The cost will increase when you add on other necessities such as General Liability, etc.
It’s recommended not to cut on the cost of your insurance, as it’s there to save you from bigger financial losses you may face in the future.
Is Cannabis Insurance Required by Law in Ohio?
Ohio law doesn’t have a specification for cannabis insurance. As a medical marijuana dispensary, you’re required to follow the same rules as other businesses.
Keep in mind that Ohio state doesn’t allow private insurers for businesses, so you’ll need to self-insure or work through the Ohio Department of Insurance to get your premium.
Filing an insurance claim in Ohio requires a few steps. The state provides detailed guidelines on how to file an insurance complaint.
First, you can try to resolve the issue by contacting your agent. Ensure you have your policy number ready, get into a thorough discussion, and follow up with a written explanation of the issue and how you’d like to solve it. If you’re unsatisfied with the results, contact the Consumer Services Division of the Ohio Department of Insurance (ODI).
You can use the website to file an online complaint, call the toll-free number 1-800-686-1526, or mail a written complaint to the Consumer Services Division.