Status: Fully Legal

Cannabis Insurance
in Washington, D.C

Recreational
No Cannabis Program
Medical Only

Understanding Washington, D.C. Cannabis Industry

Washington, D.C., being the capital of the U.S., has more influence from the 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 remained illegal (other than by medical marijuana dispensaries).

While it is still a criminal offense to take money in exchange for cannabis for 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 Market

Currently, recreational sales in D.C. are prohibited by law. Additionally, the values for revenue generated through medical marijuana sales are 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 sales across the district. Since Initiative 71 in 2014, many 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 the punishment of imprisonment for cannabis possession arrests and replaced them with different fines.

Later, the Safe Cannabis Sales Act of 2019 provided a potential foundation for regulating businesses and sales of cannabis. It included the daily purchase limit for adults, possibilities for online retail and home delivery of cannabis, and the new sales tax of 17%.

For businesses, it stipulated that D.C. residents were to make up 60% of new cannabis business owners and employees.

In 2021, the Comprehensive Cannabis Legalization and Regulation Act was introduced, which is meant to support previous cannabis-related incarcerations. It promotes social equity, promises 50% of tax funds to be reinvested in impacted communities, and will expunge arrests and convictions related to cannabis.

Other laws are being introduced to solidify a booming cannabis market in the district. However, the Harris Rider measure (which blocks cannabis sales in Washington D.C.) was added to the bill for 2022. That means sales are still 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.

Currently, recreational sales in D.C. are prohibited by law. Additionally, the values for revenue generated through medical marijuana sales are 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., is gradually working toward legalizing sales across the district. Since Initiative 71 in 2014, many 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 the punishment of imprisonment for cannabis possession arrests and replaced them with different fines.

Later, the Safe Cannabis Sales Act of 2019 provided a potential foundation for regulating businesses and sales of cannabis. It included the daily purchase limit for adults, possibilities for online retail and home delivery of cannabis, and the new sales tax of 17%.

For businesses, it stipulated that D.C. residents were to make up 60% of new cannabis business owners and employees.

In 2021, the Comprehensive Cannabis Legalization and Regulation Act was introduced, which is meant to support previous cannabis-related incarcerations. It promotes social equity, promises 50% of tax funds to be reinvested in impacted communities, and will expunge arrests and convictions related to cannabis.

Other laws are being introduced to solidify a booming cannabis market in the district. However, the Harris Rider measure (which blocks cannabis sales in Washington D.C.) was added to the bill for 2022. That means sales are still restricted until further action is taken.

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.

Types of Cannabis Insurance Coverage in Washington, D.C.

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

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Choosing the Right Cannabis Insurance Policy in California

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AlphaRoot Badge 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

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Benefits of Cannabis Insurance for Washington, D.C. Businesses

AlphaRoot is licensed to provide cannabis insurance coverage throughout Washington, D.C. , 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 Washington, D.C. there are no minimum cannabis insurance requirements. However, there is a set standard of insurance requirements that all commercial operators must fulfill. These include Workers’ compensation insurance and Commercial auto insurance.

  • MSO’s
  • Dispensaries
  • Lab Testing
  • Cultivation
  • Investment Funds
  • Manufacturing
  • Distribution
  • Technology
  • Psychedelics
  • Brands Service
  • Providers

 

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Getting a Quote for Cannabis Insurance in Washington, D.C.

Cannabis Insurance in Washington, D.C.
Frequently Asked Questions

Cannabis insurance 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. 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 cannabis insurance 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 policies are fixed according to your business’s category.

Cannabis insurance 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.