Page 18 - May2017

Davis. “There’s still no standard to
follow across the board.”
When it comes to workers
compensation insurance, Davis says
there are a few more carriers willing
to offer coverage to the marijuana
industry.

“Workers compensation insurance
is primarily run based on state laws,
so you see that market opening up
a little in states where marijuana is
now legal,” Davis says. “But that
number is still very limited due to
the social stigmas attached to the
product. Mostly, the carriers offering
coverage are non-rated or smaller
carriers who aren’t worried about a
negative public image.”

Assuming the national trend for
marijuana legalization continues,
Davis believes this will change
rapidly over the next five-to-10 years
as courts and governments address
some of the key coverage concerns
“For underwriting consideration, the first thing we must and conflicts between state and federal law.
determine is whether the use is recreational, or if the
proposed insured had been issued a prescription for “Once carriers can properly assess what their risk is and
medical use,” says Pinney Insurance underwriter Mike know how the judicial system will defend the policies, it
Woods. “If it’s for medicinal purposes, underwriting is will be much easier for more major carriers to enter the
going to be looking to the specific issue that the marijuana market,” Davis says.
is being used to treat.”
Marijuana and Auto Insurance
For recreational use, Woods says the underwriter is going
to want to know the frequency of use. The intersection of legal marijuana and auto insurance has
been fairly uncomplicated thus far, and that’s because the
“Cannabis contains carcinogens, and evidence suggests insurance ramifications for getting caught driving high are
that heavy cannabis use may be associated with oral no different than those associated with driving under the
cavity, pharynx, esophageal, and lung cancers,” Woods influence of alcohol.
says. “Because of those concerns, many carriers will assign
tobacco use rates for any use.” “If you’re convicted of driving under the influence of
marijuana your insurance rates will go up, just like they
Marijuana’s Impact on Businesses would if you were charged with a traditional DUI for
booze,” Wells says.
For businesses in the legalized marijuana industry,
insurance providers are still operating in unchartered However, one of the most significant questions concerning
waters, says Tim Davis, workers compensation and general legalization is whether or not more recreational pot
liability insurance expert. legalization has lead to more incidents involving so-
called drugged driving. It’s been four years since Colorado
“Because marijuana is still against federal laws, this causes and Washington were the first to legalize recreational
a major limitation in the marketplace for any business that marijuana, and the data is still a bit unclear.
serves or operates in the marijuana industry,” Davis says.
“General liability exposure is still untested, and since the “I would say the legalization of marijuana has caused a
exposure is too new to have time to develop, we will have spike in auto accidents for a few reasons, and the most
to see how the premiums for this industry shake out.” significant one is that new users who don’t have any
tolerance to marijuana often overuse it and are not aware
For instance, if you own a marijuana retail store and of its effects until it’s too late,” says Lindsey Parlin, a
someone falls while shopping there, general liability Colorado-based criminal defense attorney who specializes
insurance would cover any medical costs incurred by the DUI cases. “Even if you smoked 30 years ago, you might
shopper. What’s more, product liability issues may come not realize that the effects of the marijuana out there today
into play for marijuana retailers selling edible marijuana are much more significant.”
food products.
Nonetheless, it’s very difficult to find any empirical data
“Premiums are still incredibly high for the few carriers who that links marijuana legalization to an increase in stoned
offer insurance to the marijuana industry because no one driving in any of the seven states that now allow for its
knows yet if this type of insurance will be profitable,” says recreational use.

18 insight may 2017