The Ultimate Industrial Hemp Insurance Guide

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Mar 08, 2023
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Risk Management Tips
hemp insurance

Industrial Hemp Insurance Overview 

Industrial hemp is an ancient industry experiencing a modern renaissance. Since the Federal Government (finally!) made the distinction between hemp and weed (“marijuana”) plants, farmers across the country got busy planting seeds. However, a lack of processing and manufacturing infrastructure led to a post-Farm Bill bust that saw prices for hemp plummet, and farmers lose money.

It was a frustrating start to such a promising industry — but if there’s one thing cannabis people know, it’s how to get up and try again.

The demand for hemp and hemp products has continued to grow year-over-year, but the main stopgap for the US is the infrastructure to process the plant domestically. This is a challenge, true, but it’s also an opportunity for creative entrepreneurs and forward-thinking venture capitalists.

Fortunately, funding is increasing as consumers and business owners seek a new, more sustainable path that aligns people better with nature, not competition. The domestic industrial hemp industry is projected to have a $32 billion impact by 2030, making this the perfect time to establish a presence.

Risks for Industrial Hemp 

Like all aspects of the cannabis industry, industrial hemp faces a combination of everyday business risks and those unique to the industry. All of these risks are manageable with hemp insurance, the right plan, and a knowledgeable team behind you, but the first step is understanding what you’re up against.

Agricultural Risks

Agricultural risks pertain specifically to cultivating or growing hemp, including:

  • Production risks include broken machinery and a reduced or destroyed harvest.
  • Marketing risks, including the volatility of the market, price swings, and fluctuations in demand for hemp.
  • Legal risks include growing a crop that tests “hot” (AKA has too much THC to sell) and dealing with regulation changes, local pushback, and theft.
  • Human risks are common to any agricultural endeavor because no large farm runs well without a team.

Regulation and Compliance Risks

These risks include navigating the confusing regulations that come down from a federal, state, and local level. Compliance can mean a mountain of paperwork and meticulous record-keeping to prove you’re doing what you’re supposed to. Unsurprisingly, as with all bureaucratic processes, there’s much to manage.

Financial Risks

Financial risks apply to plant-touching and non-plant-touching businesses due to the volatility of hemp prices and the cost and scale of the necessary machines. For plant-touching companies, the risk of theft increases due to misunderstanding the difference between hemp and weed.

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