Understanding Marijuana Crop Insurance For 2021

For years, the image of a cannabis cultivator has been a scruffy hippie in a disorganized underground economy getting “high on his own supply”. Today’s picture of cannabis cultivators is shiny, white large-scale agricultural facilities run like clockwork in a mega economy.

As legal medical and now increasingly, recreational cannabis takes root, the whole industry is becoming more professional, with cultivators investing heavily in modern, largescale farming. With these big investments, insurance cover is progressively becoming an issue of priority.

Insurance is readily available when grows are in more controlled environments such as greenhouses or warehouses. With the boom experienced after the hemp cultivators and the farm bills, the growth of the industry and hence popularity in outdoor crop cultivation is becoming a scenario underwriters just have to warm up to.

We will look at marijuana crop insurance in-depth and shed some light on what it is, why you need it, and how you can get it.

What is Marijuana Crop Insurance?

Marijuana crop insurance is a type of cover which is specifically designed to protect the crops of a cannabis farmer through the whole growing cycle. It covers both outdoor and indoor hazards such as soot, fire, temperature, and water. It is important to note that usually, this cover does not include crop failure for reasons such as rot, disease, mold, or fertilization issues. Crop insurance is very complex and efforts are being made to work with the NCIA to improve the general outlook.

The plant itself is the most important asset in a cultivation business and yet it’s the most at risk. While insurance was once considered to be a necessary evil, it is now considered to be an absolute necessity, especially for businesses in high-risk areas such as cannabis cultivation. No business can afford to run without insurance and risk losing its inventory, equipment, and investment. You might be wondering whether insurance for your cannabis crop exists…yes it does. We will take you through the scope and process of obtaining it.

Crop insurance may encompass coverage of the following:

• Living Plant Material: This includes seeds, cannabis plants through all the stages of vegetative growth, immature seedlings, to flowering mature plants.
• Harvested Plant Material: This is mature cannabis that is in the drying or curing phase.
• Finished Stock: Completely processed and ready for sale marijuana.

While calculating crop coverage, the information provided by you such as estimated harvests per year, production per plant, and wholesale value expected is taken into consideration. Premiums for your crops are thus calculated based on their wholesale value and the number of plants in the cultivation cycle at each stage and at any given time.

What Areas Should a Marijuana Cultivator Cover?

As cultivators are faced with a wide range of perils and risks in their operations, they need to put adequate coverage in place. The risks they run include theft, vandalism, natural factors like extremely bad weather, fire equipment breakdown among others.

The investments they usually seek to protect are seeds, the growing crop, harvested produce awaiting shipment, infrastructure such as the greenhouses, lighting, security, and farm equipment, just to name a few. Not only do they have to worry about the crop in their fields, but they also have to be concerned about inventory in transit to wholesalers or dispensaries.

The magnitude of this operation can be very worrisome. Fortunately, with the right cover, the cannabis cultivator can be at peace knowing that his investment is protected. The following options for cover would be ideal to include in the marijuana crop insurance to ensure all the different facets are taken care of:

• Product Liability Insurance: While the farmer is usually not the end seller of finished products, it is wise to put this cover in place in case a suit is traced back to his farm.
• Business Income Insurance: In the event, the business is thrown totally off by an incident such as a fire, this cover would cover the net income lost and normal operating expenses as well as cater for a location to new premises.
• General liability
• Property insurance
• Workers compensation for the workers on your farm and facility
• Cargo Insurance for when your product is in transit.

What Will I Be Covered Against?

Among others, coverage is available against the following potential dangers:

• Lightning
• Theft
• Equipment breakdown
• Fire
• Explosions
• Hail or windstorms
• Vandalism
• Smoke
• Accidental leakages from fire safety systems
• Accidental leakages from air-con, plumbing, or heating devices
• Environmental Monitoring/Control System (indoor or greenhouse)
• Automated compressors and pumps
• Interruption of Service

Other risks not covered here could also be discussed with your insurance provider.

What Are The Requirements for Marijuana Growers Insurance?

To increase the chances of a cannabis growers insurance policy being issued to you, here are a few basic requirements you have to meet:

• First, a licensed electrical contractor must inspect your facility to confirm a few things. This includes checking if your electrical architecture including a number of circuits and power supply is well installed and adequate for your operations.
• The contractor must then prepare a letter of approval which is required when ordering/binding the insurance policy. In order for you to be insurance compliant, this system needs to be maintained.
• Second, a security system needs to be installed and operational, including a bugler alarm that directly reports to an external monitoring system. As with the electricity, this system needs to be well maintained and properly working at all times so as for you to be insurance compliant.
• Third, if you wish for your finished stock to be covered, you must have a safe that is ½ TON OR TL-15 installed and securely bolted to the floor with motion detectors around the safe room location. Note that this is only a requirement for finished stock coverage.

Most insurance providers will not cover you before you have met these basic requirements, hence you should plan ahead to have them installed.

Who Can You Get Insured With?

There is a whole range of insurance providers who can now cover your cannabis crop. You should however do your due diligence to ensure you end up with a reliable company that understands the cannabis business and is usually quick to pay out on claims.