Living The High Life: Insurance For Marijuana
Cannabis is becoming more widely available across the whole of Canada thanks to changing laws and progressive legislation. However whilst businesses and users are making the most of these new changes, the insurance industry seems unsure how and when to respond.
The decriminalisation of cannabis use has seen significant progression over the past few years, beginning with its legalization in Colorado during 2013. As part of his election pledge, Justin Trudeau stated that he would legalise the usage and possession of cannabis for personal use. Now that the Liberal Party of Canada is in office we will see updated legislation incorporating these changes sometime in the spring of 2017. However until this legislation is in place there is still a grey area as to what is legal and what is not concerning marijuana. Until the law has officially changed, the use of weed is only legal if used for medicinal purposes and is prescribed by a physician (these also include medical pot distributed via mail order or homegrown). But in spite of this there has been a massive increase in the number of cannabis dispensaries opening all over Canada.
The Weedmaps website currently provides an online directory of recognised dispensaries, some offering online deals and delivery services. It has also seen a billboard advertising campaign in Toronto where there are thought to be over 350 dispensaries currently in operation. Demand is increasing and even the closures of illegal storefront dispensaries and the seizure of stock by police is failing to see a halt to these businesses, even though the law is yet to be officially passed. It seems that every time a supplier of marijuana is closed down another opens. As many currently exist outside of the law, insurers are understandably reluctant to cover building and stock until the law is official. Despite still needing a prescription to purchase ‘medical marijuana’, many Canadians seem to be able to be able to obtain a script for ‘personal’ orders.
There has been a small response to the growing of marijuana from insurance companies who will insure commercial properties for MMPR (marijuana for medical purposes regulations). They include standard coverage for produce, property damage and business interruption, recognising that the growing of these substances can be treated like any other agricultural or lifescience product. As relevant specialty products are scarce, demand is very high for what little there is. There are currently 27 publicly listed marijuana companies in Canada which are likely to increase over the course of the year. But unlike some American insurance companies, there is still an absence of insurance products aimed at dispensaries, protecting their operation costs and properties. Whilst marijuana for medical use is still legal, there seems to be a reluctance to embrace this niche market even though it is on the cusp of becoming mainstream. With sales expected to hit $6billion from nearly $4million users by 2021, there is massive potential waiting to be explored regarding insuring such businesses.
Once cannabis becomes more widespread (and more importantly, legal for recreational users), what sort of cover will there be for pot smokers? There has been great debate in America concerning life insurance policies determining whether cannabis users are ‘smokers’. Bill Moore from the Munich American Reassurance Company states that, "A significant number (of underwriters) no longer jump to classify marijuana users as smokers. Instead, they are placing a strong emphasis on frequency of use and medical history to determine rates”. With approximately a third of underwriters in agreement, it will be interesting to see which side of the fence Canadian underwriters will sit on in determining whether to give their clients lower premium rates than those traditionally classed as smokers. However the general consensus in Canada is that marijuana users will be classed the same as smokers, despite being available in other forms.
There are also other potential emerging risks with increasing recreational drug use. Driving under the influence is normally excluded from most insurance policies, but with pot smoking becoming legal will there be a recognised limit imposed on drivers, and if so how will this be measured? Traces of cannabis intake remain in the body longer than alcohol in the blood, ruling out a similar approach to a method of measure. Studies of high drivers are surprisingly scarce, but those so far have seen patterns of slower driving, though this could also extend to reaction times. Until further tests are carried out it is still uncertain whether there will still be a blanket ban on drivers under the influence or whether policies will incorporate certain types of user or damage caused in these incidents. But with vehicle collisions and auto physical damage likely to occur as a result, testing screening devices and covering for accidents must be given priority
HR departments may also have their work cut out for them dealing with the after effects of employees who have been smoking the night before, or even smoking during office hours. Points to consider include employee performance, employee health and cover for medical marijuana treatments. The latter could become incorporated on more employee policies as patient numbers increase.
With a wide range of clients including businesses, employers, drivers and manufacturers, there is a whole sector of insurance waiting to be covered. But until the law is officially passed it is unclear whether the insurance industry in Canada will lead by example or wait until the changes have come into effect. Either way there is going to be a lot of work to do.
To find out more about insuring marijuana on Insurr, click here.
Other stories of interest:
‘Avalanche’ of pot dispensaries popping up across Canada is leaving some cities without an answer
Where we are with marijuana insurance
Driver’s high – how does marijuana affect driving safety?