Cannabis Insurance
in Vermont
Although Vermont has been conquering the medical section of the cannabis industry, the recreational program is still in the start-up phase. As a result, navigating recreational consumers has a new element of products, expansion, and employment risks. With unique exposure, only insurance can properly mitigate and protect your long-term investments. Although Vermont has been conquering the medical section of the cannabis industry, the recreational program is still in the start-up phase. As a result, navigating recreational consumers has a new element of products, expansion, and employment risks. With unique exposure, only insurance can properly mitigate and protect your long-term investments.
Understanding the vermont Cannabis Industry
A recent addition to U.S. states with legalized recreational cannabis, the state of Vermont approved adult cultivation and possession of marijuana in 2018. However, sales weren’t legalized until 2020 and didn’t begin until October 2022.
Unlike most other states, Vermont approved recreational cannabis legislatively rather than through voting. Gov. Phil Scott (R) gave the green light through bill S.54, which discussed the legalization, regulation, and taxation of cannabis sales.
Overview of Vermont's Cannabis Market
Although the market in cannabis is relatively new, it’s growing steadily. With an excise tax of 14%, the state collected $1.6 million in taxes (as of February 2023) only in its first year of operations.
Currently, there are 40 licensed cannabis stores selling products, and the output from this small number has business owners hopeful of seeing more growth in the coming years as the industry expands in the state. The state is estimated to collect $16 million in its first fiscal year.
Vermont Cannabis Laws and Regulations
Vermont began legal cannabis use under medical conditions in 2004. It took the state almost two decades to allow recreational marijuana for citizens 21 years of age and older. In 2018, bill H.511 was signed to decriminalize the possession of small amounts of cannabis.
Later in 2020, bill S.54 was approved, which regulates and taxes marijuana sales. In the same year, the Vermont Cannabis Control Board (CCB) was established to build the legal cannabis market in the state. As sales have recently started, changes in laws are expected in the coming years as the industry grows.
Risks Faced by Cannabis Businesses in Vermont
For the time being, Vermont is experiencing a booming cannabis market with little to no pushback. Dispensaries’ primary issue in the initial days was a lack of stock.
The influx of demand on opening days left many shops out of their products for which business owners weren’t prepared. However, this high demand was a good sign for the coming year and made cannabis businesses prepare for more sales than expected.
Although the market in cannabis is relatively new, it’s growing steadily. With an excise tax of 14%, the state collected $1.6 million in taxes (as of February 2023) only in its first year of operations.
Currently, there are 40 licensed cannabis stores selling products, and the output from this small number has business owners hopeful of seeing more growth in the coming years as the industry expands in the state. The state is estimated to collect $16 million in its first fiscal year.
Vermont began legal cannabis use under medical conditions in 2004. It took the state almost two decades to allow recreational marijuana for citizens 21 years of age and older. In 2018, bill H.511 was signed to decriminalize the possession of small amounts of cannabis.
Later in 2020, bill S.54 was approved, which regulates and taxes marijuana sales. In the same year, the Vermont Cannabis Control Board (CCB) was established to build the legal cannabis market in the state. As sales have recently started, changes in laws are expected in the coming years as the industry grows.
For the time being, Vermont is experiencing a booming cannabis market with little to no pushback. Dispensaries’ primary issue in the initial days was a lack of stock.
The influx of demand on opening days left many shops out of their products for which business owners weren’t prepared. However, this high demand was a good sign for the coming year and made cannabis businesses prepare for more sales than expected.
Types of Cannabis Insurance Coverage in Vermont
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 Vermont
Protecting your business from all angles helps create long-term opportunities and validate your dedication. Cannabis has unique struggles compared to other consumer products from not being federally regulated. We help empower you with our knowledge and relationships in the industry to help with your 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.
Benefits of Cannabis Insurance for Vermont Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Vermont, 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.
There aren’t any state mandated laws for insurance of cannabis businesses in vermont. However, all commercial operators need to follow the same insurance guidelines.
The required insurance coverage includes workers’ compensation. For that, the coverage must be of $100,000 per accident, $500,000 per policy, and $100,000 per employee. However, you don’t need these if umbrella coverage is available.
Automobile liability coverage is also needed, however it doesn’t have a specified coverage amount.
- 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 Vermont
Cannabis Insurance in Vermont
Frequently Asked Questions
What Does Cannabis Insurance Cover?
Your cannabis business needs cannabis insurance to mitigate risks. Depending on your insurance coverage, you can be covered for unintentional harm, accidents, injuries, customer complaints, property problems, etc.
You want protection from a reputable cannabis insurance provider because the typical insurance broker won’t be willing to cover your cannabis business due to the federal government’s stance on cannabis.
It’s best to get insurance that covers your company’s crucial components, as they could result in expensive charges in case of any problems. Insurance will lessen the unexpected costs that your company may have to pay.
The price of cannabis insurance varies depending on your company’s nature and size and the coverage you need. Because insurance is not a one-size-fits-all product, there is no general range to compare the insurance quotations you receive.
You can compare quotes from various insurance brokers after gathering estimates for the coverage you require. Choose the insurance plan that best protects your company.
Cannabis insurance isn’t specified by law but is still important for your cannabis business. Your business must also be insured according to the state’s standards.
In Vermont, workers’ compensation insurance and automobile liability insurance is required by all companies. As cannabis insurance companies fully understand the risks your business can face, it’s best to opt for cannabis insurance over regular insurance.
You can file for a cannabis insurance claim like any other insurance claim. You need to contact your insurance broker and inform them of the situation. They’ll review your policies and let you know if they can cover the expenses you’re facing. You can also provide further details to help distinguish an accident, intentional harm, foul play by a third-party, etc.