How much does cannabis business insurance cost?

Dispensaries and other cannabis businesses pay an average of $167 per month, or $2,000 per year, for general liability insurance.

A general liability policy helps cover legal fees related to common third-party lawsuits, such as an accident that injures a customer or damages their property. It also covers advertising injuries, including slander, libel, and accidental copyright infringement.

This is the average general liability policy for cannabis companies that buy from Insureon:

Insurance premium: $167 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $7,500

Small business owners can often save money on general liability insurance by bundling it with commercial property coverage in a discounted bundle, such as a commercial package policy (CPP).

The cost of general liability insurance depends on several factors, such as the coverage limits you choose, the size of your business, years of experience, your claims history, and any endorsements, such as an additional insured.

Among cannabis businesses that purchase general liability coverage with Insureon, 24% pay less than $50 per month and 62% pay $100 or less per month. A dispensary with a lot of foot traffic will likely have a higher premium than a cannabis manufacturer that doesn't have a storefront.

Policy limits determine how much your insurance carrier will pay on covered claims. Higher limits cost more—and provide better coverage.

Your policy's per-occurrence limit is the maximum your insurer will pay for a single incident. The aggregate limit is the most your insurer will pay on any claims during your policy period, typically one year.

Most cannabis businesses (94%) choose a general liability policy with a $1 million per-occurrence limit and a $2 million aggregate limit. As your small business grows, you may need to expand your policy limits.

When you buy general liability insurance, it typically includes product liability insurance. That means your premium could also be affected by the products you sell, such as cannabis flowers, edibles, creams, or vapes.

Product liability insurance pays for legal expenses related to bodily injuries and property damage caused by your products, including defective products. For example, a customer might suffer an adverse reaction to an edible, or a vape pen could overheat and cause a fire.

Even if you weren't responsible for the defect, a customer could still sue your business for any harm it caused. That's why retailers, distributors, and every other business in the supply chain needs this coverage.

The cost of product liability insurance depends on several factors, especially the risk of customer lawsuits associated with your cannabis products.

For commercial property insurance, your premium depends on the value of the business property you wish to insure. Other factors that affect the cost of commercial property insurance include the property's location, its condition, and the deductible you choose.

This type of coverage is sometimes called business hazard insurance. It protects your building and its contents against financial losses from storms and fires, theft, vandalism, and similar risks.

Your premium also depends on how you choose to be reimbursed for a property claim. You can opt for actual cash value, which reimburses you for the current depreciated value of an item, or replacement value, which is how much it would cost to buy a brand-new replacement.

Cannabis operations that install a security system or take other risk management measures can sometimes save money on their policy. It's also typically cheaper to buy property insurance and general liability insurance together in a commercial package policy or similar bundle.

Marijuana dispensaries and other businesses in the cannabis industry pay an average of $506 per month, or $6,074 per year, for a commercial package policy.

A CPP is a cost-effective way for businesses with moderate risks to buy general liability insurance and commercial property insurance together. It covers the most common types of customer lawsuits, along with damage to your business's building, equipment, and inventory.

This is the average commercial package policy for cannabis businesses that buy from Insureon:

Premium: $506 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $5,000

Many commercial package policies include product liability coverage to protect against legal costs related to your cannabis products, such as an allergic reaction to CBD that sends a customer to the hospital.

The cost of a commercial package policy depends on the value of your business property, the coverage limits you choose, the condition of your property, any policy exclusions, and risk factors such as fires, floods, or natural disasters.

Among cannabis businesses that purchase a CPP with Insureon, 32% pay less than $300 per month and 61% pay a premium of $600 or less per month. A CPP that provides crop insurance for cannabis growers will cost more than coverage for a small drive-through dispensary.

For cannabis businesses, workers’ compensation insurance costs an average of $374 per month, or $4,490 per year.

This type of insurance coverage helps pay for medical expenses when an employee is injured on the job or develops an occupational illness. It also provides disability benefits while they're recovering and unable to work.

To comply with your state’s requirements and avoid penalties, cannabis businesses typically must purchase this coverage for their employees. It's also recommended for sole proprietors, as health insurance plans can deny claims for work-related medical bills.

Most policies include employer's liability insurance, which covers the cost of lawsuits related to employee injuries. There's usually no limit to how much a workers' comp policy can pay for employee benefits, though it depends on state laws.

The cost of workers' compensation insurance depends on several factors, including the number of employees you have and the level of risk involved with their jobs.

Get more information on how to find affordable workers' compensation coverage.