Understanding the Importance of Crop Insurance for Cannabis Cultivators

The cannabis industry is booming and is expected to hit a market volume of over 100 billion USD. The cannabis supply chain starts with cultivators, who invest a significant amount of time growing healthy, high-yielding plants that set the stage for manufacturers, retailers, and consumers. 

While cannabis cultivation can be highly profitable, many risks threaten the profitability and livelihood of cultivators. This is where crop insurance saves growing facilities against unforeseen circumstances.

Below, we’ll discuss what crop insurance is, what horticultural threats it provides protection for, and how costs are generally calculated for cultivators who can’t afford to have their meticulously grown crops destroyed by factors that are out of their hands.

What Is Cannabis Crop Insurance?  

Let’s begin with the question that you are no doubt asking yourself, “What is cannabis crop insurance?” Odds are, you’re probably on the right track.  

Crop Insurance serves as a protective measure for cannabis growers, buffering unforeseen crop losses by covering the business’s primary financial assets — their trichome-covered plants. Mainly, crop insurance provides a financial lifeline after natural disasters, adverse weather conditions, disease breakouts, or pest infestations.  

Whether it’s a flood hitting the fields, a fire outbreak, or a power grid breakdown disrupting your growing conditions, crop insurance can be the difference between salvaging months of cultivation or taking devastating losses. In some instances, the federal government extends support to farmers by offering crop insurance programs. 

What Does Crop Insurance Usually Cover? 

There are a couple reasons farmers don’t always opt for crop insurance. Some cultivators may not have heard of it. Not every cannapreneur designing a grow facility has a professional background in agriculture. Others may not realize this service is available to the cannabis industry. Then some farmers simply feel the risk doesn’t support the cost.

Regardless of the reason why a cannabis cultivator may not currently have crop insurance, it’s important to understand what risks it can help mitigate, especially when your crop is expensive to cultivate and produces high-value flower that will be used in a multitude of cannabinoid products. This allows each grower to make an informed decision for their indoor or outdoor grow facility.

Specialized crop insurance is a protection solution available to cultivators that provides security before you begin to harvest your plants. It covers many risks, such as losses from poor weather conditions, plant diseases, theft, or destruction from sabotage. Here’s a quick overview of when crop insurance becomes applicable: 

1. Weather Damage 

Damages from floods and hailstorms are a real threat to outdoor growers. Hostile weather conditions can reduce your number of viable plants and decrease yields, which results in lost profits. Crop insurance can cover the damaged plants. This enables the cultivator to recoup costs and begin a replanting strategy for the next season. 

2. Disease Spread 

In cannabis cultivation, the spread of various diseases is a common challenge. A blight of aspergillus, mold, or fungus may not only damage the infected plant but also spread throughout the whole crop if not caught and mitigated quickly.

This can result in huge crop losses for a cannabis cultivator. However, if your insurance policy covers disease, it can compensate for the damaged crop, helping the cultivators recover.

3. Theft or Vandalism

Whether it’s from bad actors outside the company or employees, the value of cannabis plants makes them attractive targets for theft. A break-in or vandalism incident may lead to huge financial losses and damage your reputation as a secure and reliable cultivator.

Such situations require specialized cannabis crop insurance to compensate for the losses incurred. Crop insurance stabilizes the cultivator’s financial situation. Bridging that financial gap provides the grower peace of mind until the next crop cycle is complete.

4. Fire Outbreak 

Like most botanical life, cannabis plants are not keen on fire. Wildfires and arson have destroyed legal and unregistered cannabis crops alike. Even if you simply have an accident in your grow facility breakroom — fire can result in crop loss and damage to your farm or grow-room infrastructure.

Nonetheless, having the right crop insurance in place provides a compensation payout. This financial assistance allows the farmer to rebuild the farm, replant crops, and move the business forward with limited consequences. 

What Are the Criteria and Costs? It Depends.

Crop insurance certainly carries many benefits to cannabis cultivators, however, it’s not a “one size fits all” solution. It is, however, very customizable and can be adapted to a wide variety of agricultural circumstances. Let’s take a quick look at the criteria and cost factors that are reviewed when a cultivator considers protecting their crop with specialized insurance.

Common Criteria for Crop Insurance

For many farmers, crop insurance is the backbone of their risk management plan. The coverage criteria for this type of insurance are generally different from others and look at many factors, such as: 

  • Crop type (In your case, cannabis.)
  • Timing of coverage
  • The region where crops are grown 
  • Insurable causes of loss 
  • Exclusions 
  • Coverage levels 

Companies offering crop insurance to cannabis cultivators will ask questions about your plants before harvest to ensure they can provide the most relevant coverage given the maturity, condition, and location of your plants.

Cost Associated With Crop Insurance

With cultivators farming in a multitude of regions and in a plethora of circumstances, it’s not surprising that the cost of insurance varies. The price of crop insurance is generally determined by various factors that fluctuate over time. The premium you pay regularly to maintain coverage — monthly, quarterly, semi-annually, or annually — depends on the following factors: 

  • The size of your farm
  • The type of crops you cultivate
  • Your farm’s location 

Additional, external factors which affect the price you pay for your crop insurance often include: 

  • Your local insurance industry
  • Economic conditions
  • Weather patterns 

For example: If there’s been a rise in insurance claims during the previous year, you can generally expect insurance costs to go up.

How Do I Learn More? 

If your cultivation business lacks the most relevant cannabis insurance for your grow operation, now may be the right time to consider talking to someone and educating yourself on available options.

Deciding on crop insurance is a strategic decision that can provide both peace of mind, and more importantly, keep your business running smoothly should your cultivation business suffer unexpected damage. If you’re curious about adding crop insurance to your disaster mitigation plan, you can learn more by visiting AlphaRoot.

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