A new breed of insurance company tackling the cannabis and agriculture industry. 

Whether you are an active Cannabis advocate, anti-decriminalization proponent, or caught somewhere in the middle, there is no doubt the topic of legalization was front and center in November’s election.

There were 4 pivotal states that voted to create medicinal programs (AR, FL, MT, ND), and yet another 4 states that voted for recreational use (CA, MA, ME, NV). Many believe that California’s influence as a pioneer in cannabis reform was the domino needed to push the country towards full-on legalization.

At Founder Shield, our interest started in January 2014 when the Compassionate Care Act was launched into effect in our home state of NY. If you are familiar with Founder Shield, you already know we love working with cutting-edge industries. Our goal remains consistent: to create a seamless and efficient experience for businesses to not only procure insurance, but utilize it to scale.

The progressive thinking and entrepreneurial spirit driving the Cannabis industry into what many are calling the “next-great American industry” perfectly matches the Founder Shield mission statement.  That’s why we created AlphaRoot.

World, meet AlphaRoot.

AlphaRoot is a full-service insurance brokerage and technology platform focused on creating custom risk solutions for cannabis, agriculture, and supporting ecosystems.

With strategic underwriting partners, a full-service operations team, and support from the Founder Shield infrastructure, we believe AlphaRoot will be a massively important asset to our peers in the cannabis & agriculture industries.

You may be wondering…how the hell does an industry so antiquated and slow-moving gear up to support something as “risky” as Cannabis?  Through education, of course.  We at AlphaRoot work hard to educate our underwriters on the ways that our cannabis clients de-risk their operations, getting better quotes from more insurers with a quicker turnaround time.

B2B Technology and Ancillary Software businesses

B2B SaaS is one of the core areas that we’ve tackled already.

Software is one of the most interesting areas of the budding cannabis & ag-tech industry, applying modern day algorithms to dispensaries, automation to crops, products analysis, and commerce platforms . Companies like Tradiv and Leaflink represent best in class technology when it comes to SaaS products that allow industry players to interact and utilize a marketplace to move inventory. Headset is another promising player focusing on insights and data behind dispensaries.

For any company in the ancillary software side of the business,  2 coverages remain consistent:  Errors & Omissions + Cyber Liability.

SaaS businesses have similar risk profiles at the core. Platform related issues that could lead to outages affecting platform usability where your customers may suffer a financial or (brand) related loss similar to the November 21st  DNS attacks, could be covered by Errors & Omissions. Any sensitive data that companies may store on their customers, products, or 3rd parties is potential for a major loss. This would be covered by Cyber Liability.

Companies like Dope Media & PotGuides showcase another vertical within the ancillary technology players: Media & Content. With many Cyber policies today you can request to add Media Liability which is relevant for companies who are frequently putting out in-house or user-generated content.

Although the ancillary space continues to show promise, many businesses who are focused on the grow-side will interact with these risks as they bring technology in-house as well. It’s crucial to make sure you have the right E&O/Cyber plan in place in our industry.

Infused products & edibles:

Infused products & edibles is another sector of the Cannabis industry that is booming. Because of the influence of state-regulated programs, there is yet to be a clear winner in terms of the top Cannabis-branded products with different players in each market.

Much of the focus in the industry has been on regulation of the bud (or “flower”), infused products (oils/waxes/ tinctures), and the classic edible market ( your college roommates brownies). To date there is no one governing body who is regulating things such as the THC content & dosage, pesticides in the plant, and unwanted chemicals. As a result, 3rd party labs have been popping up to create more of a uniform testing of products, and we believe is the right step to legitimize the business.

Because of the volatility of regulated brands, Products Liability has become massively important. Legislation and a few brave carriers are setting precedent for what is a coverable Products Liability claim.  The good news is that our carriers are rolling out new programs to better cover any bodily injury or property damage from as a repercussion of the given product.

Dixie Elixirs is making a serious push to become the Coca Cola of Cannabis with new & unique product lines, clean packaging, and a top-notch leader with Tripp Keber.

Companies like Leaf (TechCrunch 2015 standout), who focus on the medicinal side of the business through at-home-grow technologies, also fall into the products liability this category of risk.

Cultivation & Retail

As we move towards tolerance and acceptance from both the medicinal as well as recreational use, the trailblazers on the cultivation side are to thank for much of the change that has taken far too long.

For a modern grow operations, there are hundred of millions of dollars of living plant material, high-end equipment, finished product, and real-estate at risk any given time . Same thing with Dispensaries. These retailers have an immense amount of value in their stores and like any other retail business, there is a clear insurable interest.

Companies like Columbia Care & Medicine Man are two prime examples of some of the larger players who are innovating on the cultivation and dispensary side. General Liability & Property coverage remains essential here. Having the ability to cover damage caused by natural perils (lighting, fire, explosions, windstorms, fire,) as well as leakage from water damage is crucial especially on the grow side.

For Dispensaries, available GL coverage inclusive of Business Interruption can be crucial to a business that suffers any of the aforementioned perils and needs to temporarily close its doors to fix the damage. Many different verticals within the business can utilize General Liability as a core piece of coverage.

Venture Capital and Investment

Most Cannabis companies need to raise capital through both traditional (Venture Capital/Angel funds) and non-traditional funding.

The Arcview Group has become the premier investment vehicle in the space, utilizing programs like CanopyBoulder and Gateway as deal sources for ArcView’s $85M deployed between more than 131 companies.

Anytime one of these Cannabis startups (or any other startup!) is funded, the investors and founders need to think about Directors & Officers coverage. D&O provides protects the personal assets of the founders, C-Level executives, board members, and investors, for claims alleging mismanagement of the company.  These claims can come from shareholders, vendors, government regulators, and more, so this is a very important coverage to have as a company scales.

This is just the beginning 

At AlphaRoot we believe that with right insurance, legal, and compliance programs in place we will continue to legitimize the Cannabis industry and drive the business to new heights.

This is just the beginning and the future looks bright!

Jeffrey Samuels, General Manager @AlphaRoot



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