What calibrated coverage for cannabis looks like for MSO’s.

Multi-state operators (MSO) represent a single brand while evolving across state lines and into other verticals. Whether through investment or M&A activity, MSOs are growing rapidly, despite the slow pace of federal legislation. As imagined, operating in several states while maintaining legal compliance is the primary risk MSOs currently face.

A license to succeed.

State lines. Lines of business. Calibrated coverage means lines of insurance that fit your growth plan.

One of the biggest issues MSO’s face is the multitude of state and local regulations they must navigate in order to operate in each of their various locations. Each state and municipality has its own laws as it relates to the growing, selling, and distribution of cannabis products which can create an operational nightmare for companies. These operational challenges can lead to infractions which may result in insurance-related claims

Many farmhands or workers operate heavy machinery. Unfortunately, if an employee gets ill or hurt on the job, the cultivator is typically held responsible for medical costs and lost wages.

Multi-state operators often use equipment that is expensive to replace or repair. And this equipment is generally stored inside secure buildings. Without adequate protection, damage to equipment or buildings could add up to out-of-pocket costs.

Multistate Operators face legal liability arising from others using the product (flower). Even if it’s not your brand, you may face a lawsuit should someone get hurt or sick from the use of your product.

A license to succeed.

State lines. Lines of business. Calibrated coverage means lines of insurance that fit your growth plan.

One of the biggest issues MSO’s face is the multitude of state and local regulations they must navigate in order to operate in each of their various locations. Each state and municipality has its own laws as it relates to the growing, selling, and distribution of cannabis products which can create an operational nightmare for companies. These operational challenges can lead to infractions which may result in insurance-related claims

Many farmhands or workers operate heavy machinery. Unfortunately, if an employee gets ill or hurt on the job, the cultivator is typically held responsible for medical costs and lost wages.

Multi-state operators often use equipment that is expensive to replace or repair. And this equipment is generally stored inside secure buildings. Without adequate protection, damage to equipment or buildings could add up to out-of-pocket costs.

Multistate Operators face legal liability arising from others using the product (flower). Even if it’s not your brand, you may face a lawsuit should someone get hurt or sick from the use of your product.

Testimonials

We’ve found AlphaRoot, particularly Isaac, to be proactive, with spot-on coverage suggestions and hands-on help. Plus, the AlphaRoot online platform eliminates a lot of tedious work we previously had to do for renewals

Dean Kisieu CFO, Arcview

Our previous broker didn’t have sufficient industry knowledge, but Eric is highly professional and knowledgeable. He’s always on top of things, responding faster than I can type. AlphaRoot even checked for gaps in coverage — who wouldn’t want that?

Marina Chumakova CFO, Cannabistry

Core Coverage

Directors & Officers

Shareholders, competitors, investors, etc., can sue A MSO’s 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.

General Liability

General liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.

Product Liability

Cannabis companies offering 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

This policy is first-party coverage that protects the Total Insurable Value (TIV) of your operation’s property, reimbursing cannabis companies for direct property losses.

Crime

Whether employees steal from you, a thief robs your armored car, or you receive a forged check or fraudulent wire transaction, money theft happens in many ways. Crime insurance guards your cannabis company against damages from these particular crimes.

Cyber Liability

Cyber insurance protects companies from third-party lawsuits relating to electronic activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.

Bond

This coverage protects scheduled payment of interest and principal. Many local ordinances require MSOs to secure bonds, and AlphaRoot has the ability to service these bonds.

Employment Practices Liability

Cannabis companies with any number of employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects cannabis companies against lawsuits related to employment practices.

Workers' Compensation

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.

Directors & Officers

Shareholders, competitors, investors, etc., can sue A MSO’s 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.

General Liability

General liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.

Product Liability

Cannabis companies offering 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

This policy is first-party coverage that protects the Total Insurable Value (TIV) of your operation’s property, reimbursing cannabis companies for direct property losses.

Crime

Whether employees steal from you, a thief robs your armored car, or you receive a forged check or fraudulent wire transaction, money theft happens in many ways. Crime insurance guards your cannabis company against damages from these particular crimes.

Cyber Liability

Cyber insurance protects companies from third-party lawsuits relating to electronic activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.

Bond

This coverage protects scheduled payment of interest and principal. Many local ordinances require MSOs to secure bonds, and AlphaRoot has the ability to service these bonds.

Employment Practices Liability

Cannabis companies with any number of employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects cannabis companies against lawsuits related to employment practices.

Workers' Compensation

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.

MSO Specific
Coverage

Professional Liability

Professional liability, also known as errors and omissions (E&O) insurance, covers companies in third-party or client lawsuits claiming substandard work or service. Work errors or oversights, missed deadlines, budget overruns, etc., often result in costly cases — but professional liability insurance responds to these mishaps.

Crop Coverage

As a type of Property coverage, Crop Insurance covers loss of crop due to a physical loss by a covered peril. For example, consider a fire in the cultivation facility and the damage it would cause the MSO’s facilities itself and the crops.

Auto Liability

Owned auto insurance provides first-party property damage coverage for your vehicle and bodily injury coverage to uninsured or underinsured motorists. HNOA includes coverage for third-party property damage and bodily insuring resulting from accidents during your business.

Excess Liability

For large MSO’s the primary limits of General Liability and Product Liability are likely to not offer sufficient coverage in the event of a loss. As such, we’d recommend Excess Liability coverage to offer additional protection, as well as risk transfer and compliance.

Property-in-Transit

Most property policies limit the coverage territory to just 100 ft. off of the designated premises. However, a Property-In-Transit enhancement will offer coverage for property being transported.

Professional Liability

Professional liability, also known as errors and omissions (E&O) insurance, covers companies in third-party or client lawsuits claiming substandard work or service. Work errors or oversights, missed deadlines, budget overruns, etc., often result in costly cases — but professional liability insurance responds to these mishaps.

Crop Coverage

As a type of Property coverage, Crop Insurance covers loss of crop due to a physical loss by a covered peril. For example, consider a fire in the cultivation facility and the damage it would cause the MSO’s facilities itself and the crops.

Auto Liability

Owned auto insurance provides first-party property damage coverage for your vehicle and bodily injury coverage to uninsured or underinsured motorists. HNOA includes coverage for third-party property damage and bodily insuring resulting from accidents during your business.

Excess Liability

For large MSO’s the primary limits of General Liability and Product Liability are likely to not offer sufficient coverage in the event of a loss. As such, we’d recommend Excess Liability coverage to offer additional protection, as well as risk transfer and compliance.

Property-in-Transit

Most property policies limit the coverage territory to just 100 ft. off of the designated premises. However, a Property-In-Transit enhancement will offer coverage for property being transported.

Types of MSO's Companies
That Need Insurance

Extractors

These facilities use sophisticated techniques to isolate specific plant compounds (i.e., CBD, THC, etc.)

Grow Operations

These cultivators grow various cannabis plants, intending to harvest the flowers for product use.

Laboratories

Research and development spurs discovery forward in labs focused on cannabis extraction, distillation, and purification.

Transporters

Pickup and delivery services provide speedy and efficient logistics support for cannabis brands nationwide.

Dispensaries

Since regulators legalized recreational use, the storefront has been the traditional means of reaching consumers.

Professional Services

These companies provide many services, including consulting, marketing, developing, processing, advising, managing, reporting, etc.

Manufacturers

These “plant-touching” operations transform the pure crop into a consumable alternative through labor-intensive processes.

Distributors

Cannabis distribution companies play the unique role of “middleman,” delivering products from growers to business consumers, such as brands or dispensaries.

Brands

Cannabis brands come in various shapes and sizes, from celebrities branding their own cannabis product line to emerging companies trying to elevate their consumer’s experience.

Technology

Tech companies offer the cannabis industry many solutions, including inventory management systems, temperature control systems, online purchasing systems, education platforms, etc.

Investors

Venture capital and private equity firms invest and provide funds to businesses with a high potential for long-term growth.

Extractors

These facilities use sophisticated techniques to isolate specific plant compounds (i.e., CBD, THC, etc.)

Grow Operations

These cultivators grow various cannabis plants, intending to harvest the flowers for product use.

Laboratories

Research and development spurs discovery forward in labs focused on cannabis extraction, distillation, and purification.

Transporters

Pickup and delivery services provide speedy and efficient logistics support for cannabis brands nationwide.

Dispensaries

Since regulators legalized recreational use, the storefront has been the traditional means of reaching consumers.

Professional Services

These companies provide many services, including consulting, marketing, developing, processing, advising, managing, reporting, etc.

Manufacturers

These “plant-touching” operations transform the pure crop into a consumable alternative through labor-intensive processes.

Distributors

Cannabis distribution companies play the unique role of “middleman,” delivering products from growers to business consumers, such as brands or dispensaries.

Brands

Cannabis brands come in various shapes and sizes, from celebrities branding their own cannabis product line to emerging companies trying to elevate their consumer’s experience.

Technology

Tech companies offer the cannabis industry many solutions, including inventory management systems, temperature control systems, online purchasing systems, education platforms, etc.

Investors

Venture capital and private equity firms invest and provide funds to businesses with a high potential for long-term growth.

Read Our Guide

Learn about, common risks in the Cannabis space and how to mitigate them, including licensing, compliance, funding and insurance strategy.

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