As the cannabis industry continues to expand, one of the fastest-growing segments is cannabis-infused beverages. From sparkling seltzers to THC-infused teas and craft-style drinks, these products are reshaping consumer preferences and capturing a wider audience that often includes individuals who may not be traditional cannabis users. For companies entering multiple markets, however, growth brings not only opportunity but also increased risk.

Insurance has become a critical component of business strategy for multi-state cannabis beverage brands. With varying state regulations, evolving federal policies, and unique product liability issues, companies must develop comprehensive insurance strategies to safeguard operations, protect intellectual property, and prepare for unforeseen challenges.

Why Insurance is Different for Cannabis Beverages

Cannabis beverage producers face insurance challenges beyond those of traditional food and drink companies. Unlike conventional alcohol or soft drink manufacturers, cannabis beverage brands operate in a fragmented regulatory landscape. Every state sets its own rules for THC limits, testing, labeling, and distribution. This patchwork creates risk exposures that shift with every new market entered.

Additionally, beverages pose unique liability issues compared to flower or concentrates. For instance, dosing inconsistencies, shelf stability, and cross-contamination risks make product liability insurance essential. If consumers become sick—or even claim they consumed too much THC due to inaccurate labeling—brands could face lawsuits. Without proper insurance coverage, a single claim has the potential to jeopardize the company’s financial stability.

Core Insurance Coverages Every Cannabis Beverage Brand Needs

Multi-state operators must build insurance portfolios that cover both general business risks and the cannabis-specific exposures unique to infused beverages. The following coverages are often considered essential:

• General Liability Insurance: Covers third-party bodily injury or property damage claims. For cannabis beverages, this protects against incidents like customers slipping in a retail shop or alleging harm from consuming a product.
• Product Liability Insurance: Perhaps the most critical policy for cannabis beverages. It covers claims of illness, injury, or mislabeling. With infused drinks, dosing accuracy and contamination risks make this coverage non-negotiable.
• Property Insurance: Protects physical assets such as production facilities, infusion equipment, and warehouses. Cannabis beverage producers often invest heavily in machinery, making property insurance a must-have.
• Crop Insurance: For vertically integrated companies growing cannabis inputs for beverages, crop insurance protects against losses from natural disasters, pests, or mold.
• Workers’ Compensation: Covers employee injuries on the job. Given the mix of agricultural, production, and distribution labor involved, workers’ compensation is critical for cannabis operators.
• Cargo and Transit Insurance: Beverages must often be shipped across complex distribution networks within each state. Cargo coverage protects against loss, theft, or damage during transport.
• Directors and Officers (D&O) Insurance: Protects executives from personal liability for decisions made in the course of managing the company. As cannabis brands attract investors and expand into new states, D&O coverage helps mitigate risk for leadership.

Navigating Multi-State Insurance Complexities

A major challenge for multi-state cannabis beverage brands is that insurance policies cannot be applied uniformly across jurisdictions. State-specific laws, combined with the lack of federal legalization, mean that insurers often write cannabis policies on a state-by-state basis.

For example, a THC seltzer brand operating in California, Nevada, and Michigan may need separate product liability and general liability policies in each state. This creates administrative complexity and drives up costs.

Additionally, insurers’ willingness to underwrite cannabis risks varies significantly. Some carriers may exclude cannabis beverages entirely, while others may charge high premiums to offset perceived risk. Brands must therefore shop carefully for insurers with cannabis expertise, often working through specialty brokers who understand the industry.

Balancing Cost and Coverage

Insurance is notoriously expensive for cannabis operators, and beverage companies often face even higher premiums. Product liability policies, in particular, can be difficult to secure at affordable rates. Some companies are forced to balance coverage with budget constraints, deciding how much risk they are willing to self-insure.

Smaller beverage brands may struggle with high deductibles or limited coverage, but cutting corners can prove costly in the event of a lawsuit. For growing companies, risk management often becomes an investment in long-term sustainability. By demonstrating strong safety protocols, rigorous quality testing, and regulatory compliance, companies can sometimes negotiate lower premiums with insurers.

Risk Management as Part of the Insurance Strategy

While purchasing coverage is essential, insurance alone is not enough. Multi-state cannabis beverage brands must also adopt proactive risk management practices that reduce claims and help secure better insurance terms.

Key strategies include:

• Rigorous Quality Control: Maintaining consistent dosing and product safety is critical. Documented testing and quality assurance procedures can reassure both consumers and insurers.
• Compliance with State Regulations: Staying up to date on shifting state requirements for labeling, packaging, and THC limits reduces the risk of regulatory action.
• Employee Training: Proper training in production safety, handling of cannabis ingredients, and customer interaction reduces workplace accidents and product errors
• Contractual Risk Transfer: Many companies require suppliers, distributors, or co-packers to carry their own insurance and name the beverage brand as an additional insured. This spreads risk across the supply chain.
• Crisis Management Planning: Preparing for potential recalls, lawsuits, or PR crises ensures a company can respond quickly and minimize damage.

By combining these practices with strong insurance coverage, cannabis beverage brands can create a resilient framework for growth.

The Role of Specialty Insurers and Brokers

Because mainstream insurers remain hesitant to fully embrace cannabis, many operators rely on specialty carriers and brokers with cannabis expertise. These professionals understand the unique risks of infused products and can structure policies that address both state requirements and brand-specific exposures.

Specialty brokers often serve as advisors beyond simply placing coverage. They help cannabis beverage companies evaluate gaps in protection, prepare documentation to support underwriting, and negotiate with insurers to obtain better rates. For multi-state operators, having a broker who understands cross-jurisdictional complexities is invaluable.

Preparing for Federal Legalization

Looking ahead, federal legalization—or even rescheduling—could reshape the cannabis insurance market. If cannabis is removed from Schedule 1 status, mainstream insurers may be more willing to enter the market, increasing competition and potentially lowering premiums.

For cannabis beverage brands, this would be transformative. National insurance programs could replace the patchwork of state-specific policies, simplifying operations and reducing costs. Until then, however, brands must continue to navigate the fragmented landscape and rely on specialized insurers.

Forward-thinking companies are already preparing for this shift. By documenting strong risk management practices, maintaining compliance, and building positive relationships with insurers, cannabis beverage operators can position themselves for better coverage options once the federal market opens.

Insurance as a Competitive Advantage

Insurance is often seen as a cost of doing business, but for multi-state cannabis beverage brands, it can be a competitive advantage. Companies that invest in robust coverage and proactive risk management not only protect themselves from financial shocks but also build trust with regulators, investors, and consumers.

As the cannabis beverage market grows and matures, the companies that balance innovation with strong insurance strategies will be best positioned to lead. The path may be complex, with varying state rules and high premiums, but resilience in the face of risk is what will separate the market leaders from those left behind.

In a business where consumer trust is everything, insurance is more than a safeguard, it is part of the foundation for sustainable success.