Top 7 types of Insurance your cannabis business needs

Top 7 Types of Insurance Your Cannabis Business Needs To Grow


The backlash cannabis used to face is gradually fading as more people want to invest in the soon-to-be $146 billion industry. However, the cannabis industry is still heavily regulated, and with the ever-changing laws, it’s hard for the newcomers to survive.

Are you opening a cannabis dispensary, starting as a cannabis cultivator, or targeting any other operation in the cannabis industry? You must focus on two aspects: State licensing and cannabis insurance. 

With the speed at which the industry is progressing, the threats cannabis businesses face must be taken seriously. Specialized cannabis insurance is what you need to ensure that your risk management plan is as strong as ever – and you get licensed easily!

In this blog, we’ll discuss the seven primary types of insurance every business must have before it’s launched in the market. So stay tuned!

1. General Liability

Let’s start with the most obvious one – general liability insurance. 

It’s a must-have for all businesses, regardless of size or industry. The general liability policy covers third-party bodily injury and property damage claims. It also covers claims related to copyright infringement, slander, and more.

While general liability insurance is not a requirement for obtaining a cannabis license, it’s the biggest mistake to ignore it. 

Any cannabis business that tries to cut costs by eliminating a general liability expense faces the risk of crippling down after a single lawsuit.

If a customer slips and falls in your grow facility, sustaining injuries, all-risk coverage pays for their medical expenses and any legal fees associated with the incident.

2. Product Liability Insurance

There’s been a dramatic increase in product liability claims regarding cannabis products. In 2022, the Food & Drug Authority, FDA, issued thirty-three warning letters, almost a 400% hike compared to 2021. 

Product liability lawsuits focused on the levels of THC and other psychoactive components in CBD products.

As a business owner, you can be sued for misleading labels, defective/harmful products, incorrect advertising, etcetera. Product liability insurance protects businesses from financial and reputational threats from such incidents.

All legal fees, settlement costs, and non-monetary support during product liability lawsuits are covered under product liability insurance.

3. Property Insurance

Property insurance is essential for cannabis growers, dispensaries, or testing facility owners. 

Almost 80% of the cannabis in the US is produced indoors, which includes highly expensive appliances and systems. 

Plus, there are threats of trespassing, fire, lightning, and less-probable-but-possible riots and theft attempts. All of these can cause damage to your property and valuable assets. 

Property insurance ensures that your business doesn’t suffer from one unfortunate incident.

4. Crop Insurance

Both indoor and sun-grown cannabis must be taken due care of. However, there is always a risk of unavoidable, unforeseen incidents, such as chemical spills, fire hazards, or natural disasters that can severely destroy crops.

Crop insurance helps restore the facility and crops by offering monetary recompensation.

5. Workers’ Compensation Insurance

As the cannabis industry is relatively new, more businesses are in their startup phase. In a fluctuating market like cannabis, a startup comes with numerous risks and a limited budget. 

Workers’ compensation insurance helps cannabis businesses with medical expenses, lost wages, and rehabilitation costs. Several states may require cannabis growers and dispensaries to buy this policy before a license is issued.

6. Directors and Officers Liability Insurance

Most cannabis businesses are in the startup phase. This means they’re actively looking for VCs and investors. 

In 2023, the best way to attract investors is to assure them of their safety via Directors’ and officers’ liability insurance (D&O).

Even when your business is independently run, you must acquire D&O insurance for defamation or litigation cases. D&O policies cover legal costs associated with claims of mismanagement, breach of fiduciary duty, or other types of wrongdoing.

7. Cyber Liability Insurance

More and more industries rely on technology for safe and easy operations today. However, data breaches and cyber crimes are the most common threats cannabis businesses face. 

The lingering stigma around cannabis usage, data breaches, or cyber crimes such as ransomware can bring a company’s progress to a halt. So, it’s best not to ignore cyber insurance only because you have a small business or it’s not listed in licensing requirements.


All in all, it is necessary that you feel confident about your risk management plan, especially when you newly establish a business. 

Specialized cannabis insurance doesn’t just help with licensing but also gives your business and employees a boost. 

Every cannabis grow business should aim to be proactive with their risk management strategies, be prepared for all potential threats, and protect their business from any damages that may come via insurance.

How we can help?

At Cannabis License Experts, we provide you with the guidance to plan your cannabis business, acquire funding, navigate the legal requirements, and acquire the appropriate cannabis license for your operations. 

Cannabis License Experts offers support from day one of starting your cannabis business, including strategic planning, floor plan preparation, site audits, SOPs, Preventive Control Plans (PCPs), and more.

Our Edibles Compliance division can provide you with a solid plan for your edibles business to help get your products on store shelves.

Contact us today to discover how we can license and legalize your cannabis business to meet federal or provincial regulations.

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