Directors & Officers

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.

Who is Directors & Officers Insurance for?

Corporate directors and officers lead their companies in many ways, including business development, fund allocation, and regulation compliance. However, these leaders often face alarming accusations — actual and alleged. Breach of fiduciary duties, fraud, misuse of company funds, regulation noncompliance, and lack of corporate governance are common reasons for directors’ and officers’ lawsuits.

Some leaders misunderstand who needs protecting; however, both private and public companies benefit from this coverage. Also, venture capital investors typically require their portfolio companies to have this policy. Considering the recent sharp rise in D&O lawsuits, companies — startups, mid-market, and massive organizations — leave corporate leaders exposed without D&O insurance.


VC-Backed Companies

Investors typically require their portfolio companies to obtain D&O insurance before supporting them in institutional funding rounds.

vertically integrated

Vertically Integrated Operators

These companies are involved at the beginning or end of the supply chain and integrate by controlling other stages.


Multi-State Operators

Multi-state operators represent a company with potentially several brands, evolving across state lines and into other verticals.

Why you need
Directors & Officers Insurance?

Protects corporate directors and officers’ personal assets

Covers legal fees, settlements, and various expenses

Protects companies’ balance sheet from costly lawsuits

Cannabis photo


In 2021, there were 211 federal securities class action lawsuits filed, not including the cases filed in state court.



The average cost of a D&O claim is anywhere from $35,000 to $100,000 minimum.



Indemnity payments average around $500,000 but can quickly skyrocket to seven figures or higher.


What does Directors & Officers
Insurance cover?

You will have to consult your policy documents to confirm exactly what coverage your insurance provides but here are some examples of what is covered by Directors & Officers insurance

Side A

Protects corporate directors and officers’ personal assets

Side B

Reimburses company funds used to indemnify sued individuals


Side C

Provides companies balance sheet protection



Directors & Officers Insurance Enhancements

Directors & Officers Insurance Enhancements

Directors & Officers Insurance
Claim Examples?



An investor claims that you misrepresented your company while seeking funding, so they take you to court. A well-written D&O policy can protect your company from legal bills until the accusation is proven true.



Fraud is a frequent allegation made as part of commercial lawsuits. Problematically, insurance typically doesn’t cover fraudulent acts. Assuming the fraud claim is unfounded, a D&O policy will pay to get that part of the suit knocked out. But here’s the key; get the right D&O policy, and the carrier will pay to defend you against that allegation until proven true.

Directors & Officers FAQ’s?