Insurance for Cannabis Businesses in California

Insurance coverage for a California cannabis business is available mostly through surplus line insurers. You can insure crops, company property, and liabilities associated with dealing with cannabis. For crop insurance, expect to pay 1%-5% of the insured value of the crop as an annual premium for indoor cultivation. Outdoor cultivation cannabis crop premium is typically 10% of the insured value. Cannabis general liability coverage on average costs between $400 and $1,500 per $1 million of coverage, depending on the business type.

Most insurance companies in California do not provide insurance for cannabis due to the high risk of liability lawsuits against the cannabis business, leading to high cannabis insurance costs. Meanwhile, over one hundred surplus lines insurers are approved by the California Department of Insurance to extend coverage to cannabis businesses in the state.

Here are the top insurance companies providing Cannabis coverage in California:

Discuss your business insurance coverage needs with a California-licensed commercial insurance agent, who can help you decide on the coverages and pick out the lowest costs.

Is Cannabis Insurance Required in California?

Yes, you need insurance to operate a California marijuana business, especially due to this business’ unique risks. Cannabis insurance protects:

• Hemp and CBD-related products manufacturers and distributors
• Cannabis growers, extractors, and processors
• Hemp products retailers & wholesalers

As a hemp or cannabidiol (CBD) products business operator in the state, your California cannabis insurance requirements include the following:

• Proof of insurance to the California Bureau of Cannabis Control and such insurance must be from an insurer licensed to operate in the state by the California Secretary of State.
• A $5,000 bond
• A minimum of $2,000,000 cannabis general liability insurance plus an amount not less than $1,000,000 per loss
• Notifying the California Bureau of Cannabis Control not later than ten working days after a lapse in insurance.

However, the above liability coverage may not provide adequate coverage. You will need cannabis crop insurance to protect your plants, vehicle insurance, and workers compensation insurance (if you own cars and have people working for you). California laws require marijuana cultivators, owners of cannabis dispensaries, and laboratories to have cannabis property insurance for the protection of their physical properties.

For more information on the insurance required for California cannabis cultivation, interested parties should contact cannabis insurance agents or cannabis insurance brokers. Also, to protect yourself and your business against cannabis-related lawsuits, you may need the services of a cannabis insurance lawyer.

Why Do Cannabis and Hemp Product Manufacturers Need Insurance?

Cannabis and hemp product manufacturers in California need insurance to protect their businesses from financial ruin. Like every business owner, you need protection against liability and property losses.

As of November 3, 2022, there were 126 hemp growers, breeders, established agricultural research institutions, and 1,485 licensed retailers in California.

As of December 1, 2022, according to the California Bureau of Cannabis Control, there were over 3,500 licensed cannabis businesses in the state:

Cannabis product manufacturers in CA are susceptible to several risks that may hurt the business. As a hemp, cannabis, and CBD product manufacturer, you need insurance protection against:

• General Liability
• Property Liability
• Workers’ compensation
• Crop failure
• General theft
• Business interruption
• Employee theft
• Cyber security
• Supply chain and Transport accidents.

To protect themselves, cannabis businesses that sell CBD topical products and ingestible products may need CBD product liability insurance to settle the cost of litigation and punitive damages if their products cause their clients allergic reactions, injuries, or deaths. Some of the common risks cannabis business owners in California need to insure against are:

• Theft (this can be in storage, in transit, or by an insider)
• Product tampering (this may lead to harm to the consumers or impact the compliance standard)
• Adapting to compliance regulations.

In addition, cannabis product manufacturers need other types of insurance coverage for adequate protection against losses. For instance, depending on the type of cannabis business you operate in California, you may need one or more of the following hemp business insurance

• Insurance for hemp growers
• Hemp crop insurance
• Insurance for hemp farms
• Insurance for cannabis extraction
• Cannabis manufacturing insurance
• Cannabis product insurance

Also, if you have a hemp processing laboratory, you may need building insurance for hemp processing to protect yourself against the risk of damages to the facility.

What is Cannabis Business Insurance in California?

Cannabis insurance in California is a specialized form of insurance that protects business entrepreneurs from risks associated with the cannabis/marijuana/hemp/weed businesses. Cannabis business insurance provides conventional insurance coverage to Californians in the cannabis and its related products business. If you grow, produce, or sell CBD-related products in California, you may need one or more of the following CBD insurance types:

• Hemp crop insurance
• Insurance for hemp farms
• Insurance for hemp growers
• Insurance for cannabis extraction
• Cannabis manufacturing insurance
• Cannabis building insurance.

Before you start a hemp business in California, you should contact a licensed cannabis insurance consultant for advice on coverages and the emerging risks. Also, speak with a cannabis insurance lawyer for legal advice on Cannabis laws in California.

What Are The Types of Cannabis Business Insurance in California?

Cannabis and its related products are considered high-risk by the insurance industry, due to the effects they may have on their users. These risks may result from the direct use of hemp, cannabis, or CBD products. California hemp business owners may need several types of insurance to mitigate the risks associated with their business operations. If your business is in any way related to cannabis or any of its derived products, you may be liable for claims from product users. Getting hemp business insurance is a way to protect yourself and your business from damaging financial losses that may result from your business dealings. Several types of hemp insurance companies provide different coverages in California depending on what role you want to play in the cannabis industry. Below are some of the types of insurance providing cannabis coverage in California.

• Cannabis general liability insurance covers third-party liability claims and pays the legal fees accompanying lawsuits and punitive damages that may result from them. Cannabis liability coverage is available in the following forms:
  • Liability insurance for CBD companies
  • Cannabis liability insurance
  • Cannabis general liability insurance
• CBD/hemp product liability insurance - This type of cannabis insurance will protect you and the business if your product leads to injuries or death of its users. For product liability coverage, you can buy hemp product liability insurance, cannabis product liability insurance, or CBD product liability insurance.
• Cannabis crop insurance - This coverage will protect you against crop and inventory losses if you grow hemp or manufacture CBD products for profit in California. For example, crop insurance would cover your cannabis or hemp crop in case of a fire. If you grow cannabis, you may need one or more of the following:
  • Hemp farming insurance
  • Hemp crop insurance
  • Insurance for hemp growers
  • Industrial hemp crop insurance
  • Insurance for cannabis extraction
  • Cannabis manufacturing insurance
  • Cannabis product insurance
• Cannabis building insurance - As a grower, manufacturer, or retailer of hemp and its associated products, you must protect yourself from losses caused by damages to your business building. Cannabis property insurance or hemp processing building insurance covers damages to your cannabis greenhouse, laboratory, and other business properties. Also, if you are a retailer of CBD products, you can protect your business outlet with cannabis store insurance, CBD retail insurance, or CBD retail store insurance.
• Cannabis delivery insurance - Covers damages and injuries in auto accidents when transporting cannabis and related products, including loss or damage to the products. Generally, insurance for cannabis delivery companies offers similar coverage to conventional auto insurance (cannabis commercial auto insurance and non-owned commercial auto insurance coverage). If you use a vehicle that does not belong to your business to deliver your products, the non-owned commercial auto insurance coverage will protect you from liability. Also, cannabis delivery insurance includes inland marine insurance that covers your products and equipment while in transit or stored in a warehouse.

What Type of Insurance Do I Need for Cannabis Clinics?

Cannabis clinics treat some medical issues with cannabis or products related to cannabis. If you own a cannabis clinic in California, you need cannabis dispensary insurance to protect your cannabis business. Generally, cannabis dispensary insurance encompasses the following policies:

• Cannabis general liability insurance protects you from third-party injuries and property damage claims that may result from the use of cannabis, your actions, or inactions. For instance, cannabis general liability insurance will protect you against claims due to injuries customers sustain within the clinic environment, personal injuries, slander, and libel.
• Cannabis product liability insurance for protection against claims due to injuries and damages resulting from the use of your products. You may be sued if you sell defective products to customers in your clinic. Cannabis product liability will pay for injuries and damages and also punitive costs resulting from injuries and damages caused by such products.
• Cannabis workers' compensation insurance covers claims from employees or their beneficiaries in the event of ill health, accident, or death occurring while on the job. Cannabis workers' compensation insurance provides coverage for employees who have worked a minimum of six months in your clinic or clocked 500 hours as workers in your clinic. Worker's compensation insurance is required in California if you have ten or more employees in your clinic.
• Business income coverage to protect you against due to inability to carry out business activities within your business premises. It pays for loss of income and extra expenses you may incur in your clinic due to fire outbreaks, accidents, or theft.
• Cannabis commercial auto insurance protects your clinic from personal injuries, property damage, and other damages if the vehicles you use for the business are involved in covered accidents. Cannabis auto insurance will provide:
  • Bodily injury liability to the designated driver against third-party injuries while driving the insured vehicle
  • Property damage liability to pay for damages you or your employees cause to third-party properties
  • Collision coverage for repairs or replacement of your cannabis clinic business vehicle after you meet the deductible if you are involved in a collision accident with another vehicle or object
  • Comprehensive coverage to cover the business vehicles from theft and accidents not caused by a collision
  • Uninsured/Underinsured coverage to protect your business from losses resulting from no-fault accidents involving uninsured or underinsured individuals
  • Hired auto coverage to protect your clinic against losses that may result from accidents when you or your employees hire or rent vehicles to carry out errands on behalf of the clinic
• Cannabis building insurance protects your business property against fire outbreaks and other happenings that may lead to financial losses.

Before you buy insurance for your cannabis business, you should have a clear idea of the type of cannabis insurance you need. Contact a cannabis insurance consultant for advice on the best cannabis insurance companies and suitable cannabis insurance solutions.

What Type of Insurance Do I Need For Cannabis Crops?

If you are a hemp grower in California, you need cannabis crop insurance. Cannabis crop insurance will reimburse you for losses incurred if your cannabis crops get destroyed. It protects your seedlings, flowering, vegetative plants, and harvested plants. Note that cannabis insurance makes payouts only for crops grown indoors and if such crops die or get destroyed.

How Much Does Cannabis Insurance Cost in California?

Cannabis is a controlled substance because of its effects on some users. The psychotic effects of hemp and its related products make cannabis a high insurable risk. Hence, only a few insurance companies offer insurance to cannabis businesses in California. Your cannabis business insurance quote will be determined by:

• Type of coverage
• The size of your business
• The complexity of your business operations
• Your claims record
• The location of your cannabis business

The table below lists how cannabis business insurance cost in CA varies by coverage types and insured amounts.

Note that the listed prices are for small-scale operations. A small cannabis clinic may pay between $2,500 and $5,000 annual premiums for general liability coverage. Larger-scale operations that involve other aspects of the cannabis business will pay higher premiums. For example, if your business includes cannabis cultivation or a testing laboratory, you will pay more for coverage. For a small indoor cannabis cultivation business, the cost of general liability and commercial property coverage may range between $5,000 and $12,000 yearly premiums.

Before you set up a cannabis business in California, seek advice from a cannabis business consultant and speak with a cannabis insurance agent for cannabis insurance solutions.

How Much Insurance Is Needed For Cannabis Crop?

Getting cannabis crop insurance in California may not be necessary. However, it is ideal to have one because it provides coverage for your seeds, seedlings/clones, flowering plants, vegetative plants, harvested plants, and finished stock. The amount of insurance you need for cannabis crops depends on the size of your cultivation site and whether it is an indoor or outdoor cultivation. Generally, cannabis crop insurance is cheaper for indoor cultivation because although you will spend more money on indoor equipment, it will ensure healthier growth of the crops and reduce theft and damages caused by weather fluctuation, and vandalism. For instance, small indoor cultivation measuring 30 feet across with a length of 50 to 100 feet may cost between $4,000 and $10,000. A large-scale operation may cost up to 10% of the insured amount. For example, if you insure your plantation for $2,000,000, you may pay up to $200,000 (0.1 x 2,000,000) for coverage.

How Much Insurance Is Needed For a Cannabis Dispensary?

The amount of insurance needed for a cannabis dispensary varies. In California, the insurance you will need to protect a cannabis dispensary depends on the type of coverage included in the insurance package, the policy limit, the size, and the location of the dispensary. Typically, you will need the following coverage for protection if you have a cannabis dispensary in California:

• General liability coverage
• Commercial property coverage
• Products, and completed operations coverage

Your insurance needs may limit the size of the coverage you require. General liability coverage includes product liability and has a limit of $2 million. Visit your local hemp insurance agency to find out how much insurance you need for a cannabis dispensary.

Where to Get Cannabis Insurance in California?

To get cannabis insurance in California - speak with trusted cannabis insurance agents who have experience with cannabis insurance solutions. A well-connected agent can design the best cannabis business coverage based on your needs and the offers available through the California cannabis insurance companies. A knowledgeable agent with access to insurers offering cannabis insurance in California will help you find the right coverage and get affordable cannabis insurance quotes.

Before you set up a cannabis or hemp-related business in California, speak with a cannabis insurance attorney to discuss how your type of business may be held liable due to the involvement in cannabis and hemp industry in the state.

Where to Find CBD Shop Insurance?

You can get CBD shop insurance from CBD insurance and cannabis insurance companies operating in California. Some of the leading California CBD insurance carriers include:

• MFE Insurance
• Cannabis insurance company
• AFIG cannabis insurance
• Cannasyre insurance
• SafeHerb insurance
• 420 insurance
• Cover Cannabis Insurance
• Admiral insurance.

To find CBD shop insurance in California, you should contact a cannabis insurance agent with access to multiple hemp crop insurance companies. Also, speak with a cannabis insurance consultant before you operate a cannabis business in California.

What Type of License is Needed to Sell Insurance to Cannabis Businesses in California?

The type of license you need to sell cannabis insurance in California depends on the cannabis insurance market niche you want to cover. For instance, do you want to specialize in cannabis building coverage, cannabis crop insurance, or cannabis auto insurance? There are different licenses for each aspect of cannabis insurance. To become a cannabis insurance broker in California, you will need some of the permits in the table below.

California Cannabis Agent/Broker Licenses

For more information on cannabis insurance agents/brokers' license requirements, speak with a licensed professional cannabis insurance consultant. You can also get additional information from the California Department of Insurance.