CANNABIS INSURANCE IN MASSACHUSETTS

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For Cannabis-Related Businesses in Massachusetts and Throughout New England

Learn more about Weeding Through Operational Risks in the Cannabis Industry.

Cannabis insurance is (or should be) as nuanced as the different strains of marijuana itself. Ideally, cannabis-related businesses (CRBs) seek coverage from a partner who has the experience and the market access to deliver a truly customized program. In Massachusetts and New England, C&S Insurance is one of those partners.

Whether you’re applying for a registered marijuana dispensary (RMD) in Massachusetts; selling wholesale, cultivating hemp, processing cannabis flowers, leaves or stalks, this page will provide everything you need to know about Massachusetts cannabis insurance, including the most frequently asked questions we receive on the topic.

The Advantage of Working with a Local Insurance Agent for a Massachusetts-Based Cannabis Business

We know several national insurance companies say they specialize in marijuana insurance for all states where marijuana is legal. So what’s the advantage of working with a local agent?

One of the largest hurdles in establishing a cannabis operation is dealing with the local approval process. Each state maintains different rules and regulations when it comes to the sale and distribution of cannabis. As a local firm we understand, for example, the differing complexities and requirements that exist in Massachusetts, as compared to what’s required by Rhode Island’s Office of Cannabis Regulation. This gives us — and our clients — an advantage over the national agencies. Knowing New England’s systems, especially the Massachusetts Cannabis Control Commission, makes us an invaluable resource for anyone entering the cannabis industry.

Cannabis-insurance

The Types of Insurance Different Cannabis-Related Businesses Need

Primary coverages needed to fulfill the MA Cannabis Commission’s requirements are general liability, product liability, and workers compensation. Beyond that, in an effort to protect business owners’ insurable interests, we would also recommend commercial umbrella coverage, commercial property coverage, professional liability, and hired non-owned auto coverage.

There are also a handful of coverages that might make sense as a marijuana business starts to grow. See the chart below for a full list of insurance coverages that are applicable to different cannabis operations.

Blue = required marijuana business insurance (in MA); light blue = highly recommended; gold = good options to explore with a local cannabis insurance agent

  • Marijuana dispensaries sell marijuana for recreational or medicinal use, facing many of today’s typical business risks, such as burglary, vandalism, theft, and fire.
  • Marijuana cultivators grow marijuana to sell recreationally or medicinally. Risks include those similar to marijuana dispensaries, in addition to issues with equipment and product liability.
  • Cannabis product manufacturers/extractors/processing plants have to deal with product liability and product recalls, and must adhere to many regulatory requirements of consumer-based products.
  • Cannabis testing labs need general and professional liability insurance.
  • Landlords refer to anyone leasing cannabis facilities, including warehouses, greenhouses, retail office space, and more.
  • Wholesalers distribute cannabis to retail facilities.

For those who aren’t familiar with the coverage terms listed above, here’s a closer look at some of the recommended policies.

Cannabis Product Liability Coverage/Product Recall Coverage

Cannabis and hemp are like other consumer-based products — say, food or beer. Because people consume marijuana, vendors are always at risk that their products might cause an injury, make someone sick, or worse. Product liability coverage (and product recall coverage, where applicable) exists to protect marijuana business owners against any claims of a defective or harmful product.

Cannabis leaves in closed system Laboratory. Scientist inspector check field. Cannabis recipe for personal use, legal light drugs prescribe, alternative remedy or medication , medicine concept
Professional Liability Coverage (especially for physicians, dispensaries and labs)

Like other types of professionals, cannabis professionals — especially those who work in healthcare, dispensaries and labs — are often called on to provide expert advice or recommendations. If this advice leads to a negative outcome, the marijuana business owner and/or the employee involved may be held liable for professional negligence or faulty guidance. Professional liability coverage (also known as Errors & Omissions coverage) exists to protect you and your team from this type of exposure. For physicians, professional liability coverage related to marijuana recommendations is often excluded from the average medical malpractice policy, and must be purchased as standalone coverage.

professional-liability-checklist
Workers’ Compensation

Massachusetts workers’ comp is a state-required insurance coverage that every business owner must carry. In Massachusetts, a workers’ compensation system exists to ensure that all workers are protected in case they are injured at their workplace or suffer a job-related illness.

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Commercial Umbrella Coverage

This coverage is for those exposures that go beyond the realm of the coverages above. Umbrella coverage is particularly important to address the significant auto exposures that come with product delivery.

umbrella insurance
Commercial Property Insurance

Commercial property insurance is just one facet of a comprehensive business insurance plan. While it can be purchased on its own, most often this type of coverage is bundled into a broader program, including general liability coverage for any bodily injury or damage to the property of others. This type of coverage comes with significant variables, such as policy limits, named and excluded perils, claims made versus occurrence, and more.

Businessman and Male lawyer or judge consult having team meeting with client, Law and Legal services concept
Commercial Auto Insurance

This type of coverage is intended to pay for losses involving cars, trucks, vans, and other vehicles that operate in the course of doing business. In Massachusetts, as in most states, this type of insurance is required if you have a business vehicle or use your vehicle for business. You cannot drive your business vehicle (or get it registered) without the required levels of protection.

White compact popular cargo mini van for local deliveries and business standing on the warehouse parking lot
Business Interruption/Business Income Insurance

Though these terms are sometimes used interchangeably, business interruption and business income insurance are not the same form of coverage, especially within the cannabis sector.

The first is designed to pay for expenses during a temporary shutdown.

The second, as its name would suggest, kicks in to cover lost earnings if a business is forced to close (due to a covered peril). Every carrier is different, and in some cases business income coverage isn’t available (as the valuing of cannabis inventory has been a problematic factor). Either way, it’s important to discuss coverage options, terms, and exclusions associated with the unforeseen interruption of your operations.

Agent offers business interruption insurance application papers.
Cyber Coverage

The FBI reports that there are as many as 4,000 cyber attacks per day, and 67% of small businesses with fewer than 1,000 employees report having been the victim of a cyber attack. What’s more, the average cyber-attack now costs nearly $3 million, according to a State of Cybersecurity report for SMBs. Cyber coverage can help you protect, among other things, sensitive employee data, product data, and client data, which is especially important if you have access to clients’ medical records, per HIPPA.

login and password, cyber security concept, data protection and secured internet access
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Frequently Asked Questions
How are marijuana business insurance policies usually structured? Do owners buy the coverages a la carte (via “monoline” policies), or do most carriers bundle the necessary coverages together?

The bundle approach is preferable to start. Depending on the business’ insurable values, there may eventually be a “layering” of carriers, in order to achieve certain coverage limits.

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What are some common insurance gaps (or missed coverages) that marijuana business owners may not be aware of?

Product liability is a common one. (See more on product liability below.) Unless specifically requested, it is not included in a general liability policy.

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What’s the difference between professional liability and product liability insurance for marijuana businesses? Who needs these coverages?

Professional liability coverage deals with what the company or employee recommends/suggests to a customer (e.g.

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What’s the difference between product recall and product withdrawal insurance for marijuana businesses?

These coverages would be most applicable to cannabis cultivators in Massachusetts and New England.

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When delivering cannabis to consumers, what type of coverage is needed to protect cargo on board?

As the state of Massachusetts inches toward approving wholesale marijuana delivery (currently only available for medicinal buyers), this is an important question. The answer is still evolving.

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What does marijuana business insurance cost?

No two businesses will have the same rates. But there are ways to estimate what your premiums might cost, even as a cannabis startup. Annual revenue and crop valuation are the key drivers of premium.

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Ask the Expert
Eric McLaughlin, AAI
Partner & Executive Vice President
Eric McLaughlin brings considerable experience in commercial insurance to the C&S team, specializing in coverage needs and risk management for post-acute healthcare facilities, transportation including multi-state fleets, as well as cannabis-related businesses. His experience with captives and high-deductible programs is invaluable to our clients who want to take their risk management strategy to a higher level, and have more control over their total cost of risk. Eric works closely with his clients to understand their operations and unique risk profiles. He acts as a dedicated advisor and partner, ensuring that clients’ insurance programs continually evolve to address changes both internally and on an industry level. Outside of work, Eric enjoys spending time with friends and family. Born and raised in the Bay State, he is an ardent Boston sports fan. Eric resides in Marshfield with his wife and two children.
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Testimonials
Our Clients Say it Best

“Year after year, Eric McLaughlin has proven to be one of the single most valuable business relationships we have forged. From day one, Eric listened intently to our unique needs and was able to identify and mitigate several risks we faced as a new employer and a cannabis testing facility in the state of Massachusetts. Conflicting state and federal laws, rapidly evolving regulations within our industry were no match for Eric… Eric advised as if he were talking to a family member. His keen perspective on not only his industry but ours has solidly placed Eric as a cornerstone in our business. Eric is a true professional and expert in his field, and we are truly blessed to have someone of his caliber in our corner, fighting to get the best coverage for our business. “

Chelsea Thompson
Indo Laboratories

“Eric has been a tremendous resource since we entered the cannabis business, and has been with us every step in the process. He is extremely knowledgeable and well-established [in the industry]. He can explain our program in understandable terms. He is very responsive, anticipating our needs and eager to help however he can. He covered our insurance needs from Builders Risk to Workers Compensation. I highly recommend Eric McLaughlin for anyone seeking insurance in the cannabis niche. “

L. Schwartz, COO
Ocean Breeze Cultivators