Cannabis Crop Insurance

What Does Cannabis Crop Insurance Cover?

Crop coverage pays for loss or damage to growing plants from covered causes, which vary by policy and grow type. It fills a gap left by commercial property policies, which list growing crops as property not covered.

The ISO Building and Personal Property Coverage Form (CP 00 10) lists "land, water, growing crops or lawns" as property not covered, and separately limits coverage for crops outside buildings. A federal court applied that language to a Colorado medical marijuana grower in Green Earth Wellness Center v. Atain Specialty Insurance (D. Colo. 2016). The court held that the growing crops exclusion unambiguously covered plants tended for their agricultural yield, at least until harvest, while harvested buds and flowers could qualify as covered stock.

That split drives how coverage is usually arranged:

• Living plants: mother plants, clones, and vegetative and flowering plants are insured under separate crop or cultivation coverage, when it is available.
• Harvested crop: drying and curing product may sit under the crop form or be treated as stock under commercial property, depending on the policies.
• Causes of loss: these differ by form. Outdoor grows face weather perils; indoor and greenhouse grows face electrical, plumbing and security risks, as the NAIC notes.

Why Is Crop Insurance Different For Cannabis Growers?

Federal crop insurance programs cover hemp, not marijuana, so licensed marijuana growers depend on private coverage. The NAIC reports that the private cannabis crop market is small and has been prohibitively expensive until more data and experience support underwriting.

USDA's Risk Management Agency explained in a 2019 bulletin that cannabis of any kind was an uninsurable commodity before the 2018 Farm Bill. That law changed the status of cannabis with a delta-9 THC concentration of not more than 0.3 percent on a dry weight basis, which qualifies as hemp and is not a controlled substance. Marijuana did not gain that status, and federal crop insurance does not cover it. Federal rescheduling of state-licensed medical marijuana to Schedule III, effective April 28, 2026, did not change this.

For hemp, the Risk Management Agency offers:

• A Multi-Peril Crop Insurance (MPCI) pilot in select counties for hemp grown for fiber, grain or CBD oil.
• Whole-Farm Revenue Protection, available nationwide.
• Nursery coverage for container-grown hemp.

For marijuana, the NAIC's 2023 regulatory guide reports:

• There appears to be a small market for private crop insurance, reportedly prohibitively expensive until more data and experience are available.
• Anecdotally, coverage appears more available for indoor cultivation.
• Parametric coverage for outdoor crops is emerging, with triggers such as recorded rainfall over a set period, wind, early freeze, hail and drought.

Parametric insurance, as the NAIC defines it, pays a set amount based on the size of a specified event rather than the size of the actual loss.

Which Cannabis Businesses Commonly Carry It?

Licensed cultivators are the main buyers of crop coverage, with options that differ for indoor, greenhouse and outdoor operations. Nurseries and vertically integrated operators with grow sites also look at it.

• Indoor cultivators: where the NAIC reports coverage is anecdotally more available, and where electrical and plumbing failures are key exposures.
• Greenhouse and mixed light growers: exposed to both weather and building systems.
• Outdoor growers: exposed to weather perils such as hail, wind, freeze and drought, and the segment where parametric products are emerging.
• Nurseries: clone and genetics operations with mother stock.
• Vertically integrated operators: which commonly coordinate crop, property and liability coverage for cultivation sites.

Licensed hemp growers are a separate case. Under USDA programs, growers must hold a license to grow hemp, and MPCI and NAP require a contract for purchase of the insured hemp. The MPCI pilot also requires at least one year of hemp production history and a minimum of 5 acres for CBD or 20 acres for grain and fiber. Hemp with THC above the federal legal level is not an insurable cause of loss.

How Are Limits Typically Structured?

Crop limits are generally set by location, and harvested crop limits may be set up to a fixed dollar amount per unit of weight, such as per pound. How a policy values plants at each growth stage determines what a claim pays.

The Connecticut Insurance Department's 2022 report states that for harvested crop, coverage limits may be set up to a fixed dollar amount per unit of weight (for example, per pound). Beyond that, crop terms to review include:

• Location limit: the most paid for all covered plants at one site.
• Valuation basis: how the policy values a plant or pound at the time of loss.
• Growth stage treatment: whether clones, vegetative and flowering plants are valued differently.
• Deductibles: how much of each loss the grower retains.
• Parametric payout: for parametric products, a set amount tied to the trigger rather than a measured loss.

How living plants, harvested crop and finished stock are split between crop and property policies determines which limit applies to a given loss. Green Earth shows that the dividing line between growing crop and harvested stock can decide whether a claim is paid.

What Do Carriers Ask For When Quoting Crop Coverage?

Underwriters generally look at management experience, internal controls, the building, safety protocols, equipment and employee training. For crop coverage, grow type and location matter because indoor and outdoor operations carry different perils.

The Connecticut Insurance Department lists six criteria underwriters may weigh for cannabis risks: management experience, internal controls, structural features and condition of the building, compliance with safety protocols, types of equipment, and the selection, training and experience of employees.

The NAIC notes that indoor and greenhouse operations raise electrical, plumbing and security questions, while outdoor grows face traditional weather perils. Quoting questions commonly follow those lines, including grow type and the site's weather exposure.

Frequently Asked Questions