Insurance Requirements for Recreational Licenses in the Tri-State Area

Applications for recreational dispensaries are now open in the tri-state area, and some will require proof of an insurance policy.

April 8, 2022
Insurance Requirements for Recreational Licenses in the Tri-State Area
Written by
Blitz Insurance

In Connecticut, New Jersey, and New York, there’s still a lot of uncertainty regarding when recreational dispensaries will open up, though recreational cannabis is already legalized in these states. While there are several reasons for the delays, much of it could be due to the complicated licensing processes that recreational sellers must navigate before they could open the dispensary. 

While some states have put out relatively clear instructions for applications (e.g. New Jersey), another obstacle to opening a dispensary can often be obtaining insurance, along with the added ambiguity of whether it is required as part of the license application or not.

Do You Need Insurance to Apply for a Recreational License?

In some states, part of the application includes having an insurance policy already in place. And, for any applications that don’t require it now, insurance is still an inevitable necessity that future dispensary owners will have to start thinking about if they want to remain competitive in these markets. 

With this in mind, it’s only a matter of time before these applicants may seek the support of an insurance broker to help. But, is it simply too early for cannabis insurance brokers to start finding policies for their clients in these states? Or, is it best to get started as soon as possible? 

In Connecticut:

Connecticut’s retailer application requirements provide an overview of what is needed to apply for a recreational dispensary license. Eligible applicants are encouraged to take a look at the following before submitting their application, in order to make sure all requirements are met:

Sorting through these documents and what’s required will be time-consuming, but in terms of insurance, none explicitly dictate that insurance must be required to apply. But, that does not mean it won’t be required once the dispensary opens. 

In New Jersey:

New Jersey’s government website provides reader-friendly application tips for retailer applicants. When it comes to needing insurance as part of the application, applicants should plan to obtain liability insurance for conditional and annual licenses as well as vehicle insurance for transports and deliveries.

In New York:

In New York, the only applications that are open right now are for the Adult-Use Conditional Cultivator License, and the requirements don’t mention insurance. Again, this doesn’t mean insurance won’t be required to begin cultivating.

Other Considerations for Cannabis Insurance Brokers

New Jersey is the only state that explicitly mentions insurance as part of the application requirements. However, in general, most businesses must have liability insurance at the very minimum in order to set up shop. This includes business liability, business property, and worker’s compensation policies. Also, knowing what insurance costs are estimated to be is important for future retailers to consider as part of their budget.

With all this ambiguity, states like New York are being called the “Wild West” of cannabis. But, states like Oregon which have set the bar for newly legalized states offer a lot of insight into important considerations surrounding recreational cannabis when it comes to insurance; such as questions regarding property damage.

By understanding what’s potentially at stake, brokers can start discussing scenarios with clients and encourage them to begin exploring the insurance policies that will best fit their needs now and in the future.

Can Sellers Buy Insurance Policies Now?

Applicants in New Jersey will need an insurance policy for their application, which means sellers in NJ can start buying insurance policies right away. And, even if a policy isn’t required as part of the application, it’s never too early for brokers to help potential clients begin exploring recreational cannabis insurance options. 

Recreational marijuana policies for future retailers in CT, NJ, and NY are no doubt a challenge to understand. Contact us today to learn more about how Blitz is helping insurance brokers serve their cannabis clients in the tri-state area.

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