Medical marijuana is currently legal in 29 states and the District of Columbia, with legalization pending in two additional states. Attempts to legalize it failed this year in 13 states, and it is still considered a Schedule 1 controlled substance on the federal level. Recreational use of marijuana is currently legal in eight states.
The increase in legalization has created a new industry for grow operations and a number of coverage issues for insurers willing to insure these enterprises that are legal on a state level, but considered illegal by the federal government. Part of the challenge stems from a lack of actuarial information in order to assess and price the risks associated with these farming operations.
Then there is the legal issue of providing coverage to an illegal operation. Insurers have already encountered coverage questions relative to medical marijuana used by terminally ill patients or those managing the pain from chronic illnesses. Physicians cannot prescribe it for treatment, but can recommend that patients consider it as part of a pain management program for some conditions.
Insurers do not knowingly pay for marijuana treatments, but that depends on how the claims are coded. A vague code could camouflage what is actually being billed. Then there are the questions that arise concerning workers' compensation.
Do insurers have to provide workers' compensation insurance to grow operations and the dispensaries that sell marijuana? A major insurer in Hawaii said it would not provide workers' compensation coverage to several of the dispensaries because the company's board of directors faces possible legal exposure at the federal level. The conflict arises because state law requires all businesses to carry workers' compensation insurance for their workers.
While marijuana is a Schedule 1 drug (as are heroin and other opiates), these conflicts will continue to arise, which could leave some of these new enterprises without the coverage they need to ensure their risks from fire, floods or other perils, and their employees unprotected for job-related accidents. Insurers will need to weigh the risks of covering these enterprises against their own legal exposures.
The answer to these conflicts rests with the federal government, which means they probably won't be resolved any time soon.
Patricia L. Harman is editor-in-chief of Claims magazine. Contact her at [email protected]. Opinions expressed are the author's own.
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Patricia L. Harman
Patricia L. Harman is the editor-in-chief of Claims magazine, a contributing editor to PropertyCasualty360.com, and chairs the annual America's Claims Event (ACE), which focuses on providing claims professionals with cutting-edge education and networking opportunities. She covers auto, property & casualty, workers' compensation, fraud, risk and cybersecurity, and is a frequent speaker at insurance industry events. Contact her at [email protected]
