Cannabis Insurance
in West Virginia
Medical cannabis is legal in West Virginia for many medical conditions, many terminally bound. Medical cannabis can be an excellent benefit for those with long-term pain and chronic diseases. Ensuring your business from general liability to specific cannabis risks, we can help navigate it with you.
Understanding the West Virginia Cannabis Industry
West Virginia is known to have legalized medical cannabis for now and the program is yet to be fully implemented.
West Virginia became the 29th state to have legalized cannabis when Governor Jim Justice signed the respective law on April 19, 2017.
Even though the agreement has been signed, and the plan was to be initiated by July 2019, because of various delays and hampers in the way, the program is yet to take on an operational route.
According to inside information, the program is set to enter the markets this year with licenses already approved for dispensaries, processors, and growers.
Overview of West Virginia's Cannabis Market
Even though the product has yet to hit Virginia’s market, according to a report by New Frontier Data, Virginia’s Cannabis Market has the potential to value as high as $46 million in sales by the year 2025.
When talking about the jobs to be created and the business opportunities that will arise, it’s still a little too soon to say anything. Nonetheless, prospects are nothing but bright.
It should be noted that Virginia is surrounded by other states that have legalized cannabis and run a successful market. This in turn will play a huge role when it comes to boosting the Virginian market and making it successful.
West Virginia Cannabis Laws and Regulations
Since the state has legalized cannabis, west Virginia’s cannabis market has gone through some significant milestones which include:
- Decriminalization: In 2020 news came out that the possession of small batches of marijuana has been decriminalized. According to the law laid down by the state, possession of marijuana up to 15 grams is seen to be an offense with a fine of $50.
- Licensing: This was especially good news for all the processors, dispensaries, and distributors out there as applications for licensing began to revolve around December 2020. The application process went on till February 2021 and the awards for these licenses will be given out this year.
Risks Faced by Cannabis Businesses in West Virginia
Just like every other state that has legalized cannabis is facing challenges here and there, cannabis businesses in West Virginia are also bound to face somewhat similar problems. These obstacles can come in the following form:
- Restricted banking services: As cannabis is yet to be legalized under federal law, financial banking services are not enthusiastic about the prospect of lending out loans to cannabis operators. So, without any help from the banking sector, a cannabis business owner needs to arrange sufficient capital on his own.
- Supply chain issues: This is one of the most important ones. Achievements of coordination among a long list of stakeholders, processors, dispensaries, cultivators, etc is a tough job and a messy one too. Any sort of disruption within the supply chain can cause serious damage to the reputation and integrity of the business.
- Competition: The neighboring states of West Virginia are already populated with successful cannabis businesses which can potentially impact the development of the cannabis market in Virginia.
Even though the product has yet to hit Virginia’s market, according to a report by New Frontier Data, Virginia’s Cannabis Market has the potential to value as high as $46 million in sales by the year 2025.
When talking about the jobs to be created and the business opportunities that will arise, it’s still a little too soon to say anything. Nonetheless, prospects are nothing but bright.
It should be noted that Virginia is surrounded by other states that have legalized cannabis and run a successful market. This in turn will play a huge role when it comes to boosting the Virginian market and making it successful.
Since the state has legalized cannabis, west Virginia’s cannabis market has gone through some significant milestones which include:
- Decriminalization: In 2020 news came out that the possession of small batches of marijuana has been decriminalized. According to the law laid down by the state, possession of marijuana up to 15 grams is seen to be an offense with a fine of $50.
- Licensing: This was especially good news for all the processors, dispensaries, and distributors out there as applications for licensing began to revolve around December 2020. The application process went on till February 2021 and the awards for these licenses will be given out this year.
Just like every other state that has legalized cannabis is facing challenges here and there, cannabis businesses in West Virginia are also bound to face somewhat similar problems. These obstacles can come in the following form:
- Restricted banking services: As cannabis is yet to be legalized under federal law, financial banking services are not enthusiastic about the prospect of lending out loans to cannabis operators. So, without any help from the banking sector, a cannabis business owner needs to arrange sufficient capital on his own.
- Supply chain issues: This is one of the most important ones. Achievements of coordination among a long list of stakeholders, processors, dispensaries, cultivators, etc is a tough job and a messy one too. Any sort of disruption within the supply chain can cause serious damage to the reputation and integrity of the business.
- Competition: The neighboring states of West Virginia are already populated with successful cannabis businesses which can potentially impact the development of the cannabis market in Virginia.
Types of Cannabis Insurance Coverage in West 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 West Virginia
Regulations revolving the cannabis insurance policy are for sure complicated. But the whole process can be made easier if you have someone who understands the detailed requirements of the system. Our services are all about the safeguarding of our clients and making their business operations smooth.
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 ChoSosing 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 West Virginia Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout West 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.
West Virginia legalized medical cannabis in 2017, but the program is still in development and not yet operational. The West Virginia Office of Medical Cannabis is currently accepting applications for medical cannabis licenses, but no licenses have been issued yet.
Once the program is operational, commercial cannabis operators will need to meet certain legal requirements to operate within the state. These requirements may include obtaining a license from the West Virginia Office of Medical Cannabis, complying with security and packaging regulations, and ensuring that products are accurately labeled and tested for quality and potency.
Operators will need to obtain insurance coverage, such as liability insurance, and comply with workers’ compensation requirements. It is also possible that the state may require additional insurance coverage specific to the cannabis industry.
- 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 West Virginia
Cannabis Insurance in West Virginia
Frequently Asked Questions
Workers’ compensation, property damage or theft, and product liability are all risks linked with the cannabis sector that will be covered by cannabis insurance. Occasionally, the coverage will pay for all costs associated with litigation and regulatory proceedings, but this is not usually the case.
Cannabis insurance often covers customer injuries, inventory loss, and staff theft for dispensary and shop owners.
As the sector grows and climbs the ladder, we will witness the launch of increasingly specialized goods that will necessitate insurance coverage for cyber threats and other complex issues.
The cost of cannabis insurance is largely influenced by the industry segment in which a business operates. Moreover, the type of operation, be it a dispensary, delivery service, or cultivation enterprise, can significantly impact the insurance coverage and its associated expenses. Each of these business types involves unique risks that must be carefully evaluated when selecting an appropriate insurance policy.
There’s no hard and fast amount regarding the cost of insurance for your cannabis business. However, the factors that will affect this cost are the same. Some of these factors are your location, requirements, risk profile, business size, and coverage you’re looking for.
Cannabis insurance costs are anywhere between a few hundred dollars to tens of thousands of dollars. The cost of cannabis insurance is higher because of more risks associated with the industry.
Businesses operating within the cannabis industry in West Virginia are required by the law to maintain insurance coverage for a variety of potential risks including property damage, general liability, and product liability.
The minimum requirement for insurance coverage equals $1 million per occurrence with an aggregate of $2 million. Besides the requirement for building insurance, everything within the building, including the inventory and equipment will also require insurance.
To get the license statement, under the law of the West Virginia Department of Health and human resources, you have to submit proof of insurance before operating as an official licensed operator.