Cannabis Insurance
in Washington D.C.
- Introduction to Cannabis Insurance in Washington D.C.
- Risks Faced by Cannabis Businesses in Washington, D.C.
- Comprehensive Coverage: Types of Cannabis Insurance Available
- Benefits of Cannabis Insurance for Washington, D.C. Businesses
- AlphaRoot Cannabis Insurance: Tailored Solutions for Your Business
- Cannabis Insurance FAQs
- Speak to a Cannabis Insurance Advisor
Introduction to Cannabis Insurance in Washington D.C.
Washington, D.C., being the capital of the U.S., has more influence from federal law than the states. The capital passed Initiative 59 in 1998 to allow medical marijuana to treat severe medical cases.
Later, in February 2014, Initiative 71 received overwhelming votes in favor of allowing adult consumption and transfer of cannabis. The law came into effect in February 2015.
Adults could then also purchase the needed tools for cultivating or using cannabis for themselves. However, the sale of cannabis remains illegal (other than by medical marijuana dispensaries).
While it is still a criminal offense to take money in exchange for cannabis for either medicinal or recreational use, one adult can transfer up to one ounce of cannabis to another adult without the exchange of money.
Overview of Washington, D.C.'s Cannabis Industry
Currently, recreational sales in D.C. are prohibited by law. Additionally, the revenue generated through medical marijuana sales is unavailable. However, since the proposal of the Safe Cannabis Sales Act in 2021, estimates for the district’s recreational cannabis market have been discussed.
Recreational marijuana sales are forecasted at $140 million for the year 2024. The Comprehensive Cannabis Legalization and Regulation Act of 2021 has suggested a 13% excise tax on cannabis sales on gross receipts from businesses. The Safe Cannabis Act has also proposed a 17% sales tax on cannabis and its goods.
Washington, D.C. Cannabis Laws and Regulations
Washington, D.C., is gradually working toward legalizing cannabis sales across the district. Since Initiative 71 in 2014, various acts and amendments have been passed to pave the way for legalized consumption and sale of cannabis.
The Marijuana Possession Decriminalization Amendment Act of 2014 removed imprisonment as a punishment for cannabis possession arrests and replaced it with fines.
Later, the Safe Cannabis Sales Act of 2019 provided a potential foundation for regulating cannabis businesses and sales. It included a daily purchase limit for adults, possibilities for online retail and home delivery, and introduced a new 17% sales tax on cannabis.
For businesses, the Act stipulated that D.C. residents should comprise 60% of new cannabis business owners and employees.
In 2021, the Comprehensive Cannabis Legalization and Regulation Act was introduced to support those affected by previous cannabis-related incarcerations. It promotes social equity, allocates 50% of tax funds to reinvest in impacted communities, and will expunge cannabis-related arrests and convictions.
While other federal laws are being introduced to solidify a booming cannabis market in the district, the Harris Rider measure, which blocks cannabis sales in Washington, D.C., was added to the 2022 bill. As a result, sales remain restricted until further action is taken.
Risks Faced by Cannabis Businesses in Washington, D.C.
Currently, only medically licensed cannabis businesses can operate in the district. That greatly limits the opportunities to a small group of individuals.
Within the proposed recreational market, there is expected to be a high influx of new businesses. However, until the district gives potential business owners the green light, there isn’t much anyone can do.
Stay Ahead with AlphaRoot
Comprehensive Coverage: Types of Cannabis Insurance Available
General liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” business insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.
Learn MoreCannabis companies that offer tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Products liability insurance covers defence fees legal costs 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.
Learn MoreProperty 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, cannabis tenants, and cannabis inventory.
Learn MoreShareholders, 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 cannabis related businesses or business.
Learn MoreEmployers 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.
Learn MoreGeneral liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” business insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.
Learn MoreCannabis companies that offer tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Products liability insurance covers defence fees legal costs 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.
Learn MoreProperty 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, cannabis tenants, and cannabis inventory.
Learn MoreShareholders, 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 cannabis related businesses or business.
Learn MoreEmployers 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.
Learn MoreExpert Advice: Choosing the Right Cannabis Insurance Policy
An insurance broker is responsible for various tasks, and hiring the wrong one can waste both your time and money. The right insurance broker will understand your values and provide the right solution for your needs. When searching for a reliable broker, consider the following essential factors:
- Familiarity with the fluctuating cannabis industry.
- Availability of risk management resources.
- Broker expertise and experience in the industry.
- The number of insurance carriers they work with.
- Ability to analyze contracts and provide advice.
- Additional considerations based 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 make 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.
This 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 due to the nature of cannabis insurance products, what you’re trying to insure, and how it’s viewed by the government. If you don’t have a policy 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 specialist.
Working closely with someone who knows the industry is critical when choosing a policy. Cannabis business owners must ask their agents/brokers many 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 grower, you rely on your cannabis crop for your income. Cannabis is agriculture, just like corn, wheat, or soy. Cultivators must protect their income, and that requires insurance, 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 need to be aware of the changing laws at the federal, state, and local levels. You also need to know your business inside and out. Part of knowing your cannabis business insurance 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 Washington, D.C. Businesses
AlphaRoot
AlphaRoot is licensed to provide cannabis insurance coverage throughout Washington, D.C. , not to mention across the entire US.
Protecting Your Investment
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 business insurance quotes, we curate powerful cannabis risk management solutions.
Managing Risks and Liability
Insurers looking to provide commercial 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.
Meeting Legal Requirements
In Washington, D.C. there are no minimum insurance requirements. However, there is a set standard of insurance requirements that all commercial operators must fulfil. These insurance needs include Workers’ compensation insurance and Commercial auto insurance.
Types of Businesses Covered
MSO’s Dispensaries Lab Testing Cultivation Investment Funds Manufacturing Distribution Technology Psychedelics Brands Service Providers
AlphaRoot Cannabis Insurance: Tailored Solutions for Your Business
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.
Cannabis Insurance FAQs
This is designed to reduce any hazards that your cannabis business may experience. Your insurance coverage depends on your company’s type, size, and needs.
There is a lot more uncertainty associated with the cannabis sector because it is rapidly expanding, and its laws keep changing. Normal insurance isn’t satisfactory in this situation for a marijuana-related firm because it isn’t designed to keep the challenges of the cannabis industry in mind.
Depending on the premium you select, your yearly insurance premium may change. Basic insurance coverage typically costs between a few hundred dollars to about $10,000. Consider insurance as a safety net for your company rather than an extra expense, as it can save you a lot of money in costly legal issues.
You don’t need to purchase any random policy, though insurance coverage options. By concentrating on the important components of your company that require protection and avoiding spending money on insurance unrelated to your business, you can reduce the cost of insurance.
There are no minimum or general requirements in Washington, D.C. All business operators need to follow the same insurance requirements: commercial auto insurance and workers’ compensation insurance. The values for both mandatory insurance policies are fixed according to your business’s category.
The claims are similar to claims of other insurance types; the state doesn’t give any specific regulations. As a filer, you need to contact your insurance broker and provide details on the issue.
You should have a complete set of information on the damages or charges they are facing. It would be helpful if you collected proof to help your claims, such as, for example, photos or videos of an accident for a general liability case.
Speak to a Cannabis Insurance Advisor
Partnering with a knowledgeable insurance provider can help you secure the right coverage for your cannabis business. Get a quote today to ensure your business is protected against potential risks and remains compliant with state regulations.
