Cannabis Insurance Regulations in California

California became one of eight US states where marijuana is now legal for adult recreational use in January 2018. The California state legislature passed an emergency regulatory reform bill in December 2017, just in time for the new rules to go into effect. The regulations total more than 200 pages and can be read at the California Cannabis Portal.

The bulk of the changes in the emergency bill serve to regulate recreational cannabis distributors in much the same manner as medical dispensaries. This dodged the need to set up an entirely new regulatory structure for recreational marijuana businesses, but it also puts in place many more regulations than a non-cannabis business is likely to see. However, one bright spot is that we now have clear guidance going forward on the insurance requirements for California businesses in the cannabis space.

New California Cannabis Business Insurance Requirements

Here are the insurance requirements for a California marijuana business as of January, 2018:

• Distributor license applicants must show a proof of insurance to the California Bureau of Cannabis Control
• Commercial General Liability Insurance: Minimum $2,000,000, plus an amount no less than $1,000,000 for each loss
• Insurance must be purchased from an insurer licensed to do business in California by the Secretary of State
• $5,000 Bond is required by the state.
• Marijuana distributors must notify the California Bureau of Cannabis Control of a lapse of insurance within ten business days

Those are the minimum liability requirements for California right now, but that will not truly protect your business. You will also likely need workers compensation insurance for your employees, crop insurance for your plants and vehicle insurance. Marijuana distributors are required under the new laws to have added layers of security for their business, so property insurance for your physical business space and security systems also makes sense.

Contact us today at 1-800-406-9166 for a free quote so we can help you get your emerging business covered!