Cannabis is serious business — an editor's note
Despite the very real conflicts between federal and state laws, carriers and other ancillary businesses are finding the manufacture and sale of cannabis very profitable.
On a recent business trip, my Uber driver asked what I did. It turned out that she worked for a large insurer’s SIU division, so I shared that I was working on a story about legalized marijuana’s impact on the insurance industry. She, in turn, shared that she smoked it at night to help her sleep and had actually used it the previous evening. Imagine my reaction upon learning this information!
While I didn’t feel unsafe, I was unnerved and watched her driving very carefully for the remainder of the trip. Fortunately, there were no issues. I reached out to Uber to ask them what they’re doing to protect their passengers from drivers who may be driving under the influence. They didn’t respond.
Cannabis to affect multiple lines of insurance
As the use of cannabis becomes more mainstream, it will affect multiple lines of insurance including workers’ comp, health, auto, property & casualty, D&O and life to name a few. Ignoring the issues will not make them go away.
Consider that owners of marijuana-related entities have made significant financial investments because they cannot obtain bank loans for what are considered illegal enterprises. These predominantly cash businesses cost millions to launch — from renting or buying real estate and purchasing equipment to product development and manufacturing, plus the hiring and training staff. If they can find and afford insurance, they buy it. If they can’t, they operate without it.
Real opportunities & risks for insurers
There are very real opportunities and risks for insurers in terms of legalized cannabis. More information on the conflict between federal and state regulations should be addressed by the new attorney general. So far, the government has yielded to state regulations and has not pursued companies that violate federal law.
There seems to be some movement on the financial front as the feds and banking institutions examine ways to serve marijuana-related businesses. Perhaps these discussions will expand to include insurers.
Part of the challenge for insurers is that all decisions are currently being made at the state level. Companies entering into this market should do their research and seek wise counsel to ensure they do not put their own businesses at risk.
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