If you’re seriously considering starting a medical marijuana business in Pennsylvania, you’re getting in at the right time. In April of 2016 Pennsylvania joined 23 other states in legalizing medical marijuana. This has created something of a ‘gold rush’ of people scurrying to get into this promising industry. And looking at the numbers, it’s not hard to understand why.
According to The State of Medical Marijuana Markets 2nd Edition published by Arcview Market Research in 2014, the legal market for marijuana in the U.S. was valued at over $1.5 billion at the time of the study, and was projected to rise to over $10 billion over the next five years, with no end in sight as even more states eventually jump on the bandwagon.
So the legal marijuana industry is hot right now, and there’s high potential for entrepreneurs getting in on the ground floor to make a lot of money. But don’t think that it’s going to be easy.
After all, marijuana remains illegal under federal law, although for the time being the Justice Department has stated that it won’t mount any challenges to state laws, and that legal marijuana organizations will be able to use the banking system. What might happen after the next election is anyone’s guess, but so far there haven’t been any signs that things will change significantly.
But those opening a marijuana business in Pennsylvania will have to navigate the labyrinths of the Medical Marijuana Act as well as the bundle of regulations drawn up by the Pennsylvania Department of Health. And then of course they’ll have to deal with all the usual red tape that any new business owner has to wade through, licenses, zoning, taxes, etc.
Not the least of those concerns will be insurance. Marijuana businesses present a unique and slightly scary opportunity for insurance brokers. Let’s look at some of the things involved.
Insurance Issues For Legal Marijuana Organizations
Like any business you’ll need insurance to cover things like product liability, theft, business continuity, shipping, fire and disaster, and worker’s compensation. One thing that medical marijuana organizations will require is information liability insurance, if they keep records of their customer’s personal and health information.
Insurers have been somewhat reluctant to offer coverage to legal marijuana organizations simply because of the uncertain nature of this new frontier. Naturally they are more inclined to work with the medical side of the industry because it’s been more accepted and established. The ambiguity of the federal government’s stance on the issue has kept some of the bigger insurers out of the game to date.
Nevertheless, many brokers are stepping up and offering comprehensive policies to business owners, even offering crop coverage and protection against loss in the event of a raid by the local police.
States Are Stepping Up
The insurance industry is regulated by each individual state. Legally, in any state that allows for the possession and cultivation, and sale, of marijuana, insurance companies can’t deny coverage.
Since the states have a vested interest in the marijuana industry – after all, they stand to make a pretty hefty windfall too – they’ve been working closely with insurers to overcome the difficulties involved, and to create appropriate insurance standards.
The costs for insurance coverage for legal marijuana businesses is still, understandably, up in the air, but policies in other states have been averaging around $700-$1,000 per year.
As always, the budding entrepreneur should do their homework and shop around for the best deals on insurance.
At any rate, those wishing to start a medical marijuana business in Pennsylvania still have plenty of time to put everything together and get it packed tight. With all the regulations and rules that still have to be hashed out, the lengthy permit process, and the time it takes to grow the initial crops, it could be up to two years before customers will be able to walk into your brick-and-mortar and make their first purchases.
Starting a legal marijuana business may sound like a long a frustrating ordeal, but it looks like it will be well worth it in the long run.