Cannabis Insurance
in South Carolina
South Carolina has been trying to legalize medical cannabis, but it still has not passed. When it does, the industry will be in startup mode and need the tools to succeed. To stay afloat in a regulated climate, you must minimize all risks to ensure profitability is an easy choice.
Understanding the South Carolina Cannabis Industry
Despite an increasing number of states legalizing the use of marijuana, South Carolina remains strictly anti-cannabis. Currently, the state is one of only 11 states that doesn’t have an established medical cannabis program for its residents.
Both medical and recreational cannabis is illegal in South Carolina and possession, cultivation, and distribution of cannabis in the state can result in prosecution. Efforts for the legalization of marijuana in SC have always been shot down, most recently in 2022. Despite this, state officials are planning on introducing bills to legalize MMJ in 2023.
Overview of South Carolina's Cannabis Market
Due to the illegal nature of cannabis in South Carolina, there is no official data regarding how much the state’s cannabis market is currently worth.
According to New Frontiers 2023 US Cannabis Report, the state of South Carolina has an estimated 687 Thousand cannabis users currently. This number is projected to grow after the state legalizes the use of medical marijuana, making it more accessible to patients who require it.
New polls in the state suggest that over 75% of SC residents support the legalization of medical marijuana, while over 50% are in favor of recreational legalization. If the state legalizes medical cannabis, 5.2 million residents will finally have the opportunity to avail the potential benefits it offers.
According to New Frontiers, South Carolina is expected to legalize medical marijuana in 2024, allowing the state to become part of the $30 billion US Cannabis industry.
South Carolina Cannabis Laws and Regulations
Despite small medical marijuana bills and repeated attempts to legalize medical and recreational cannabis, marijuana remains illegal in South Carolina.
In 2014, the state legalized the use of low-potency CBD oil to treat severe epilepsy in children. However, any other efforts to legalize marijuana have been shot down and there are currently no bills on the floor to legalize MMJ.
The possession of small amounts of marijuana (less than 1 oz) has been decriminalized by the state, however, possession of greater than 1 oz is considered a felony offense with a penalty of both prison time and hefty fines.
Moreover, South Carolina has very strict laws regarding the distribution of marijuana. The cultivation and sale of any amount of cannabis are considered a felony offense and is punishable by prison and fines. For example, the penalty for distributing 100-2000 lbs of cannabis is a minimum mandatory sentence of 25 years in prison.
Risks Faced by Cannabis Businesses in South Carolina
Despite cannabis being currently illegal, there is a growing possibility of legalization in the next couple of years. When medical or recreational cannabis is finally legalized in South Carolina, businesses will be vulnerable to risks and problems that may harm their profitability,
The controversial nature of cannabis and its high demand in the market can leave cannabis businesses vulnerable to security and liability risks. Post-legalization, businesses in South Carolina will have to worry about theft, safety, and the liabilities associated with running a cannabis business.
Due to the inconsistencies between federal and state law, there are different regulations throughout the US regarding cannabis use. This can create uncertainty for cannabis businesses as they navigate between a sea of conflicting laws.
Moreover, cannabis regulations are subject to change and businesses face the risk of non-compliance if they don’t operate within their state and their city’s legislature. This makes it even more important to stay up-to-date with the state’s laws regarding cannabis.
Due to the illegal nature of cannabis in South Carolina, there is no official data regarding how much the state’s cannabis market is currently worth.
According to New Frontiers 2023 US Cannabis Report, the state of South Carolina has an estimated 687 Thousand cannabis users currently. This number is projected to grow after the state legalizes the use of medical marijuana, making it more accessible to patients who require it.
New polls in the state suggest that over 75% of SC residents support the legalization of medical marijuana, while over 50% are in favor of recreational legalization. If the state legalizes medical cannabis, 5.2 million residents will finally have the opportunity to avail the potential benefits it offers.
According to New Frontiers, South Carolina is expected to legalize medical marijuana in 2024, allowing the state to become part of the $30 billion US Cannabis industry.
Despite small medical marijuana bills and repeated attempts to legalize medical and recreational cannabis, marijuana remains illegal in South Carolina.
In 2014, the state legalized the use of low-potency CBD oil to treat severe epilepsy in children. However, any other efforts to legalize marijuana have been shot down and there are currently no bills on the floor to legalize MMJ.
The possession of small amounts of marijuana (less than 1 oz) has been decriminalized by the state, however, possession of greater than 1 oz is considered a felony offense with a penalty of both prison time and hefty fines.
Moreover, South Carolina has very strict laws regarding the distribution of marijuana. The cultivation and sale of any amount of cannabis are considered a felony offense and is punishable by prison and fines. For example, the penalty for distributing 100-2000 lbs of cannabis is a minimum mandatory sentence of 25 years in prison.
Despite cannabis being currently illegal, there is a growing possibility of legalization in the next couple of years. When medical or recreational cannabis is finally legalized in South Carolina, businesses will be vulnerable to risks and problems that may harm their profitability,
The controversial nature of cannabis and its high demand in the market can leave cannabis businesses vulnerable to security and liability risks. Post-legalization, businesses in South Carolina will have to worry about theft, safety, and the liabilities associated with running a cannabis business.
Due to the inconsistencies between federal and state law, there are different regulations throughout the US regarding cannabis use. This can create uncertainty for cannabis businesses as they navigate between a sea of conflicting laws.
Moreover, cannabis regulations are subject to change and businesses face the risk of non-compliance if they don’t operate within their state and their city’s legislature. This makes it even more important to stay up-to-date with the state’s laws regarding cannabis.
Types of Cannabis Insurance Coverage in South Carolina
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. Product 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. Workers’ Compensation insurance 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. Product 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. Workers’ Compensation insurance covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly.
Choosing the Right Cannabis Insurance Policy in South Carolina
Protecting any business has risks. Setting up your business for success means ensuring it is insured to navigate these concerns. Being successful long-term means protecting your business from environmental, employee, state, or general liability risks, to only name a few.
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 South Carolina Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout South Carolina, 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.
Due to the illegal nature of cannabis in South Carolina, there are no legal requirements or allowances for running a cannabis business. However, as state law regarding the distribution of cannabis changes, laws for insurance may also change.
- 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 South Carolina
Cannabis Insurance in South Carolina
Frequently Asked Questions
Cannabis insurance coverage can depend on what your business requirements are as well as the insurance requirements of each state. In general, cannabis insurance will cover general liability, product liability, property liability, theft, cybercrime, and compensation for employees.
There is no set price for cannabis insurance because it varies based on the policy and the amount of coverage you choose.
Depending on the size and scope of your business, as well as your insurance plan, your expenditures might range from a few hundred dollars to thousands of dollars. Cannabis insurance may also be more expensive than insurance for other businesses owing to the inherent risks of the cannabis sector.
No, cannabis insurance is not required by law in South Carolina. Cannabis laws in the state make it illegal to own and operate a cannabis business. The distribution of cannabis in the state of South Carolina is considered a felony offense and is punishable by prison or hefty fines.
You may file a cannabis claim just like you would any other insurance claim. You must contact your cannabis insurance provider to submit a claim. Based on the facts you have concerning the incidence, your claim will be submitted and validated.
It is always necessary to study your insurance coverage to see whether the claim is covered by your insurer.