Hemp insurance is complicated and sometimes inaccessible. This is because hemp businesses are exposed to numerous risks at every stage of product development, and these risks could easily translate to massive losses if not insured.
Hemp was legalized in the U.S. by the 2018 Farm Bill (pdf). After it was legalized, the U.S. Department of Agriculture (USDA) was tasked with the responsibility of overseeing the legal hemp market in the U.S. The USDA created the U.S. Domestic Hemp Production Program through an interim final rule. This interim rule governs hemp production in the U.S. that is legal under the 2018 Farm Bill, and provides hemp insurance at a federal level.
Whole-Farm Revenue Protection (WFRP)
Starting in 2020, hemp farmers in the U.S. will be able to access crop insurance under the Whole-Farm Revenue Protection (WFRP) program. This is thanks to The Risk Management Agency (RMA), which is an arm of the USDA that is responsible for creating insurance solutions for hemp. The WFRP program provides insurance to hemp farmers to financially protect them from major disasters and massive crop loss.
Industrial hemp farmers involved in the production of hemp flowers, seeds, and fibers are eligible to apply for WFRP insurance. This program is focused on specialty crops and commodities, and is set to roll-out in 2020 during the hemp growing season. It’s worth noting that hemp farmers will have to be compliant with state and local hemp laws to be eligible for this insurance. Ensuring that their hemp does not contain more than 0.3% THC is an example of one of these laws.
The WFRP program isn’t without its flaws, though. Hemp farmers have expressed concern over the WFRP program because it may not be viable for some hemp farmers, especially small scale growers. This is an issue because most hemp businesses are small scale and are still in the trial and error phase. WFRP is designed to suit large-scale hemp growers, which is evidenced by the fact that it targeted large scale losses based on yearly financial statements.
Where to get insurance for hemp businesses
Apart from the WFRP program, hemp farmers can get hemp insurance from the following 2 outlets:
National Hemp Insurance Agency (NHIA)
The National Hemp Insurance Agency provides hemp insurance in the 48 U.S states which have legalized hemp production. They have an affiliate network with agents in all these states, and they also provide other services related to hemp insurance.
Veracity Insurance for Hemp Businesses
Veracity Insurance offers insurance services to hemp businesses in the U.S. Their services include crop insurance, liability insurance, and property insurance.
Do you need insurance to sell hemp?
In the U.S., you are not required by law to have insurance to sell hemp. That being said, having an insurance plan will save you from potential losses should anything go wrong. For example, because hemp production is often affected by weather conditions, patterns could change abruptly and render the crop useless.
Does Insurance Cover Hemp CBD Oil?
There are a few insurers who cover hemp CBD oil, which is intended for therapeutic use but may pose a risk when it is misused. As such, it is important to consider insuring a hemp CBD oil business to work against potential losses and legal suits.
Why Should Hemp Businesses Get Insurance?
Hemp businesses are high risk for two reasons. They’re involved in a new industry with changing laws and regulations, and they are likely to be involved in many hemp-related processes. This includes hemp cultivation, production, processing, research, selling, etc. Each of these steps are very complicated and increase the odds of future losses.