Cannabis Insurance
in Virginia
Virginia is new to the cannabis industry on both the medical and recreational side. With new opportunities, there are unknown risks, and protecting your business when the state and federal laws are not the same is a great way to be successful. With unique exposure, only insurance can properly mitigate and protect your long-term investments.
Understanding the Virginia Cannabis Industry
Virginia is new to the cannabis industry as it has legalized usage quite recently. Virginia legalized adult cannabis use on July 1, 2022, becoming the first state in the south to legalize it. This bill approved that adults can possess up to one ounce of cannabis.
Individuals can also cultivate up to four plants under this bill, which must be cultivated privately, away from public areas. The bill also includes provisions for expunging some cannabis-related convictions from individuals convicted in the past.
Medical cannabis can be acquired by getting a valid certification from a board-registered practitioner. Sales of recreational cannabis are still illegal. However, this will change as Virginia state has decided to authorize non-medical marijuana sales in 2024.
Usage of cannabis publicly is still illegal, and possession of cannabis exceeding limits may result in misdemeanors.
Overview of Virginia's Cannabis Market
The cannabis industry in Virginia is on indefinite hold as recreational cannabis sales are currently illegal. With the news of sales becoming legal in 2024, it is expected that the Virginia cannabis market will be more than a billion dollars.
The opposition in Virginia has shunned the idea of sales through dispensaries and alternative pharmacies. This has created a lot of hurdles in the cannabis industry in Virginia.
Virginia Cannabis Laws and Regulations
For a state in the South, Virginia has come a long way in its journey to achieve cannabis freedom.
In 2015, a law was passed legalizing medical cannabis for patients with specific health issues. It was still illegal to produce cannabis within Virginia, and patients had to obtain medicinal cannabis from other states.
In 2020, Virginia decriminalized the possession of small amounts of cannabis. Possession of up to one ounce of cannabis was classified as a civil fine of no more than $25 instead of its previous status as a criminal offense.
In 2021, Virginia legalized the adult use of cannabis and possession of up to one ounce of cannabis. This allowed users of 21 and up to use marijuana in private areas, away from the public eye.
Finally, sales of cannabis products are expected to start in 2024. This delay will allow the state to establish regulations revolving around cannabis sales.
Risks Faced by Cannabis Businesses in Virginia
Currently, there is no cannabis industry in Virginia. However, there are still risks the future cannabis industry of Virginia might face.
The first one is public perception. Some people still view cannabis consumption as dangerous and undesired. It will be no surprise if cannabis sales in Virginia are labeled as hazardous. The cannabis industry will have to work with the public to grow trust.
Secondly, due to the federal illegality of cannabis, businesses will have to face risks in the form of legal uncertainties and financial uncertainty due to banks being hesitant to work with such businesses. This means obtaining loans or credits will take a lot of work. This is also the case for cannabis businesses in all states where cannabis sales have been legalized.
Due to cannabis being a high-value product, there will be security concerns associated with the sales and operations of cannabis products. This includes thefts that have been recorded in some of the states where cannabis sales are allowed.
Lastly, there are concerns regarding cannabis regulations. Due to the opposition’s views on cannabis, future regulations regarding sales are expected to be strict, which might limit the cannabis industry from reaching its full potential in Virginia.
The cannabis industry in Virginia is on indefinite hold as recreational cannabis sales are currently illegal. With the news of sales becoming legal in 2024, it is expected that the Virginia cannabis market will be more than a billion dollars.
The opposition in Virginia has shunned the idea of sales through dispensaries and alternative pharmacies. This has created a lot of hurdles in the cannabis industry in Virginia.
For a state in the South, Virginia has come a long way in its journey to achieve cannabis freedom.
In 2015, a law was passed legalizing medical cannabis for patients with specific health issues. It was still illegal to produce cannabis within Virginia, and patients had to obtain medicinal cannabis from other states.
In 2020, Virginia decriminalized the possession of small amounts of cannabis. Possession of up to one ounce of cannabis was classified as a civil fine of no more than $25 instead of its previous status as a criminal offense.
In 2021, Virginia legalized the adult use of cannabis and possession of up to one ounce of cannabis. This allowed users of 21 and up to use marijuana in private areas, away from the public eye.
Finally, sales of cannabis products are expected to start in 2024. This delay will allow the state to establish regulations revolving around cannabis sales.
Currently, there is no cannabis industry in Virginia. However, there are still risks the future cannabis industry of Virginia might face.
The first one is public perception. Some people still view cannabis consumption as dangerous and undesired. It will be no surprise if cannabis sales in Virginia are labeled as hazardous. The cannabis industry will have to work with the public to grow trust.
Secondly, due to the federal illegality of cannabis, businesses will have to face risks in the form of legal uncertainties and financial uncertainty due to banks being hesitant to work with such businesses. This means obtaining loans or credits will take a lot of work. This is also the case for cannabis businesses in all states where cannabis sales have been legalized.
Due to cannabis being a high-value product, there will be security concerns associated with the sales and operations of cannabis products. This includes thefts that have been recorded in some of the states where cannabis sales are allowed.
Lastly, there are concerns regarding cannabis regulations. Due to the opposition’s views on cannabis, future regulations regarding sales are expected to be strict, which might limit the cannabis industry from reaching its full potential in Virginia.
Types of Cannabis Insurance Coverage in Virginia
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 Virginia
While there is no cannabis industry in Virginia, getting insurance as a cannabis business elsewhere is highly recommended. There are multiple threats to cannabis businesses, such as environmental risks, consumer risks, and general liabilities.
Maintaining operational liabilities from environmental to consumer to employee as the industry grows is essential to long-term success. Cannabis insurance works to mitigate these risks, enabling companies to stay on the path to profitability. We ensure our knowledge and relationships from years in the industry to help any state or business new to the industry to have the best success in their new endeavors.
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 Virginia Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Virginia, 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.
Find the legal insurance requirements for each state. The link below will have the fist few that we are doing.
- 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 Virginia
Cannabis Insurance in Virginia
Frequently Asked Questions
Cannabis insurance helps cannabis businesses stay secure and operate safely. It covers many risks of growing, processing and selling cannabis products. The type of insurance coverage depends on factors such as the size of your business and the laws and regulations of the localities you are operating in.
Some specific risks your insurance plan might cover include unexpected interruptions to business operations due to damage caused by fires, natural disasters, property damage, consumer, employee, and product liabilities, and theft.
One of the overlooked advantages of insurance is that it also covers you from data breaches and hacking that could compromise sensitive financial and customer information.
The cost of insurance you will have to pay for as a cannabis business depends on factors such as the range of coverage, the size of your business, the area where your business is located, and the risks of operating a cannabis business.
Cannabis insurance plans can cost a few hundred dollars if you have a small-scale business or thousands of dollars if your business operates on a larger scale with multiple business locations and more yield.
Cannabis insurance can be more expensive than other types of insurance because there are a lot of risks that come with running such a business and otherwise are not found in other businesses. These risks include legal uncertainties due to the current illegal status of cannabis by the federal government. Having cannabis insurance, however, is worth it, as an unfortunate incident can cause much more than what you are paying for an insurance plan.
As the cannabis industry is non-existent in Virginia, there are no requirements. The regulations that will come with the legalization of cannabis sales in 2024 will dictate whether or not cannabis insurance will be required.
It is highly recommended to get cannabis insurance, even if the state has no requirements for insurance. Cannabis insurance not only gives cannabis businesses peace of mind but also provides them with a stone wall against risks that come with running a cannabis dispensary.
If you run into an unfortunate incident and experience damages and losses covered by your insurance plan, contact your insurance broker without wasting any time. You will have to provide all the vital information, such as the date and time of the incident, necessary documentation, and evidence of the incident.
To provide sufficient evidence, take photos and videos of the damage, and be sure to have any relevant receipts that might be useful. Cooperating and providing your insurer with all the information will make the process smoother and hassle-free.
Once the insurance company has assessed and investigated the claim, a settlement offer will be provided. Review the offer and consult an insurance agent to ensure it’s adequate and fair.