Does Liquor Liability Insurance Cover THC Beverages?

A new law enacted at the end of the 2022 Minnesota legislative session made legalized the sale of certain products infused with THC, the psychoactive compound found in marijuana. Quite predictably, the demand for legal cannabis products has exploded. One such product is THC beverages. What many don’t realize, however, is that selling THC beverages comes with its own set of risks. This is why it is important for businesses in this industry to have the right insurance coverage. Ask your agent, “does liquor liability insurance cover THC beverages?”

Discuss your interest in selling any THC products with your commercial insurance agent before adding them to your business’ inventory. Make sure your insurance carrier will provide the necessary coverage first. Liquor liability insurance typically does not cover the sale of THC beverages.

It is important for business owners to understand that commercial insurance policies may exclude coverage for products containing THC. Consequently, if a business sells products containing THC, coverage may be denied if any damage or claim were to occur involving the use of such a product. Marijuana is still a prohibited drug at the Federal level. Thus, many insurance companies are hesitant to offer coverage.

Business owners need to review their commercial insurance policies and speak with their insurance agent to ensure they have appropriate coverage for their business. Take steps to mitigate risks and improve quality control measures. Additionally, be careful to only sell properly labeled and packaged THC products.

What do Insurance Providers Have to Say?

In an effort to help educate our clients to ensure proper coverages are in place, our commercial insurance agents spoke to representatives at many of the companies we work with to get their stance on this volatile topic. We wanted to hear about the insurability of THC beverage retailers and whether they would be able to provide necessary coverage. 

  • Half of all respondents shared that they are not a suitable market and would not insure the sale of THC beverages
  • The companies that would provide coverage for the sale of THC only did so with some or all of the following reservations:
    • Eligibility for coverage applies only as long as the sale of THC beverages are incidental to the overall business
    • Establishments that primarily sell THC edibles and beverages are ineligible
    • All manufacturing exposures that make THC edibles or beverages are ineligible (this applies to breweries/cideries, etc.)
    • If selling THC beverages and they are consumed on premises – the commercial exposure is ineligible for coverage

Based on the information gathered from insurance companies, it is also important to note that the ineligibility applies to an insured lessor’s risk exposure.  Simply put, building owners should also be aware if THC products are being sold by the business leasing the space. Liability MAY extend to the building owner, not just the individual responsible for the production or sale of the product.

Talk to Your Insurance Agent

As more businesses seek to enter this burgeoning market, additional information becomes available on a near daily basis. Minnesota Craft Brewers Guild published a very informative 33-page document discussing this very topic. Pages 17-18 refer to the insurability of THC beverages. Do you need help determining if you have the proper coverage in place based on current sales? Or are you looking to learn more about how you might add coverage for future sales? 

If you’re unsure if your liquor liability insurance covers THC Beverages, contact Annie Saboe, Becky Haley, Ben Carlson, or anyone one of our Commercial Lines agent here at Reliable Agency, Inc.! We will work with you to ensure you remain properly insured. Reliable Agency, Inc. has offices in Cloquet and Hermantown, MN and Superior, WI. Contact us today to find out how we can help you live a more joyful life!

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