In all states with regulated medical marijuana or adult-use cannabis programs, some form of insurance will invariably be required to receive and maintain a cannabis business license or for the business to otherwise operate in compliance with state laws, regulations, and contractual requirements (e.g., leases, partnership/vendor contracts, etc.).
For example, employers, including cannabis businesses, in all states must provide workers' compensation insurance as required by state law; as well as applicable auto insurance if involved in the transportation of cannabis.
Set forth below are state-specific cannabis insurance and bond requirements for the eighteen states (and D.C.) that have passed adult-use cannabis laws as of April 20, 2022.
No current cannabis insurance or bond requirements in Alaska. For more information on cannabis insurance in Alaska visit: Alcohol & Marijuana Control Office.
No current cannabis insurance or bond requirements in Arizona. For more information on cannabis insurance in Arizona visit: Arizona Department of Health Services.
California Medicinal and Adult-Use Commercial Cannabis Regulations require that a "distributor licensee shall at all times carry and maintain commercial general liability insurance in the aggregate in an amount no less than $2,000,000 and in an amount no less than $1,000,000 for each loss."
And, for all licensees, California requires " a surety bond of at least $5,000 payable to the State of California for each licensed premises." Some California counties require a separate surety bond. For more information on cannabis insurance in California visit: Department of Cannabis Control.
No current cannabis insurance or bond requirements in Colorado. For more information on cannabis insurance in Colorado visit: Department of Revenue Marijuana Enforcement Division.
Connecticut Department of Consumer Protection imposes surety bond requirements on the construction and operation of a medical marijuana production facility. A Producer is “required to maintain an escrow account in a financial institution in this state in an amount of two million dollars“ per Connecticut General Statutes Title 21a Chapter 420f.
Connecticut has not yet released adult-use cannabis licensing and insurance requirements for provisional and final licenses. For more information on cannabis insurance in Connecticut visit: Adult-Use Cannabis in Connecticut.
Illinois Cannabis Regulation and Tax Act requires "a surety bond in the amount of $50,000, naming the dispensing organization as principal of the bond, with terms, approved by the Department." For more information on cannabis insurance in Illinois visit: Cannabis Regulation Oversight Officer.
Maine Marijuana Legalization Act requires proof of a dispensary's financial responsibility in the form of a liability insurance policy. No specific limits of liability or coverage types are stated in the provision. For more information on cannabis insurance in Maine visit: Office of Marijuana Policy.
Massachusetts General Operational Requirements for Marijuana Establishments requires that a "Marijuana Establishment shall obtain and maintain general liability insurance coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually, and product liability insurance coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually."
And, Massachusetts imposes tiered levels of bond requirements ($1,750 to $25,000) depending on the type of ownership and the size of the operation. For more information on cannabis insurance in Massachusetts visit: Cannabis Control Commission.
Michigan's cannabis insurance requirements are set forth in Michigan Senate Bill (SB) 461 and Public Act (PA) 55. SB 461 approved in late December 2021 mandates product liability insurance coverage by licensed cannabis businesses. It provides that every licensee or license applicant must file “proof of financial responsibility” of at least $100,000 per license for liability for bodily injury resulting from the manufacture, distribution, transportation or sale of “adulterated” cannabis products. SB 461 further requires an “attestation of compliance” signed by an officer of the licensed insurance company.
PA 55, effective October 2021, adds section 11a to the Michigan Regulation and Taxation of Marijuana Act, prohibiting licensees from selling or transferring marijuana to a minor or to a person who is visibly intoxicated at the time of sale. It allows individuals who are injured or who suffer damage by a minor or visibly intoxicated person to take action against the licensee who sold or transferred the marijuana.
Section 11a requires Michigan cannabis retailers and microbusiness licensees to maintain insurance coverage “provided by a licensed and admitted insurance company in Michigan” in a minimum amount of $50,000 for actions brought under section 11a. For more information on cannabis insurance in Michigan visit: Cannabis Regulatory Agency; see also, Michigan's New Cannabis Liability Requirements Raise Concerns.
No current cannabis insurance or bond requirements in Montana. For more information on cannabis insurance in Montana visit: Department of Revenue Cannabis Control Division.
No current cannabis insurance or bond requirements in Nevada. For more information on cannabis insurance in Nevada visit: Cannabis Compliance Board.
New Jersey Notice of Application requires that all licensees provide a plan for obtaining general liability insurance in an amount of at least $2,000,000 aggregate and 1,000,000 per occurrence. Note, however, that applicants do not need to secure a liability insurance policy - or even a formal insurance quote - prior to obtaining a final license from the New Jersey Cannabis Regulatory Commission.
Applicants vying for a New Jersey cannabis business license can obtain a Letter of Intent (LOI) from a specialty insurance broker such as PurpleRisk® stating that your cannabis business has engaged with us and discussed your insurance requirements. For more information on cannabis insurance in New Jersey visit: Cannabis Regulatory Commission.
New Mexico Administrative Code (NMAC) 16.8.2 Licensing and Operational Requirements for Cannabis Establishments states that "transporting cannabis or cannabis products between licensees or licensed premises" requires "proof of insurance".
Note that NMAC 22.214.171.124 ("Requirements for the Transportation of Cannabis") specifically codifies in the Commercial and Medical Cannabis Regulations what is required of operators in all states, that is, proof of applicable auto insurance is necessary for the transportation of cannabis.
For more information on cannabis insurance in New Mexico visit: Medical Cannabis Program and Cannabis Control Division.
No current cannabis insurance or bond requirements in New York. For more information on cannabis insurance in New York visit: Office of Cannabis Management.
No current cannabis insurance or bond requirements in Oregon. For more information on cannabis insurance in Oregon visit: Oregon Liquor & Cannabis Commission.
Vermont law requires every licensed Cannabis Establishment "shall obtain and maintain Commercial General Liability insurance in accordance with rules adopted by the Board. Failure to provide proof of insurance to the Board, as required, may result in revocation of the license." See V.S.A. § 901(f).
Commercial General Liability (CGL) "protects against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products and completed operations [Products Liability], and advertising and personal injury (PI) liability."
Vermont Cannabis Control Board Regulation of Cannabis Establishments Rule 2 requires Cannabis Establishment shall obtain and maintain Commercial General Liability at "commercially reasonable levels of insurance" meaning the limits of CGL insurance obtained "is up to you and the insurance provider". See https://ccb.vermont.gov/FAQ
For more information on cannabis insurance in Vermont visit: Cannabis Control Board.
No current cannabis insurance or bond requirements in Virginia. For more information on cannabis insurance in Virginia visit: Cannabis in Virginia.
WAC 314-55-082 requires all marijuana license holders obtain commercial general liability and product liability insurance with no less than $1 million limit of liability. The "insurance shall cover bodily injury, including disease, illness and death, and property damage arising out of the licensee's premises/operations, products, and personal injury."
The state and its employees, agents, and volunteers shall be named as an additional insured on all general liability, umbrella, and excess insurance policies. For more information on cannabis insurance in Washington visit: Washington State Liquor and Cannabis Board.
No current cannabis insurance or bond requirements in District of Columbia. For more information on cannabis insurance in District of Columbia visit: Medical Cannabis Program.
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