Now that laws have loosened to allow sales of hemp and CBD products, many entrepreneurs are entering the field to take advantage of high demand. This sector is expected to become a $28 billion market in 2028, which will be five times greater than its value in 2020. However, before diving into this industry, it's crucial to be aware of the risks and type of insurance you'll need.
The cannabis/hemp/CBD industry faces the same risks as many other businesses that sell products to consumers, but there are additional unique risks as well. Hemp and CBD are regulated at the federal, state, and local levels, so compliance is complex. Furthermore, laws pertaining to these products are subject to change.
Hemp cultivation was legalized on a federal level with the 2018 Farm Bill, but states are still allowed to set their own laws shaping its use. While hemp is part of the cannabis family, CBD does not produce intoxicating effects due to its low concentration of THC, which is found in recreational marijuana. Some states require certifications to grow hemp and only for certain products such as CBD oil or medical marijuana.
You need to check with your state to find out what licenses and certifications if any, you need to operate your business legally. Aside from compliance concerns, you should be aware of other risks, such as lawsuits from people who have issues with THC or CBD products. Ingredients should be listed on the package, along with warnings for people with allergies. You also must be careful not to cross into a state that still outlaws cannabis.
By securing the right insurance coverage, you can manage most risks associated with growing cannabis or its cousin hemp. There are various types of coverage to consider, but a hemp business generally needs the following types of insurance:
The best way to further demystify hemp requirements is to talk with an experienced insurance agent who works with hemp companies. Contact us today at Graystone Insurance Group to learn more about the risks involved with starting a cannabis, hemp, or CBD business.