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Does Insurance Cover Medical Marijuana?

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Insurance companies do offer coverage for medical marijuana, and like many challenging relationships, it’s super complicated.

The demand for medical marijuana has increased so much in the United States that more than half of all states have legalized some form of medical marijuana use. But rapidly changing regulations have discouraged large insurers from jumping into the medical marijuana market.

The primary reason for this is that medical marijuana is still considered an illegal substance. The federal Control Substances Act classifies marijuana as a Schedule I narcotic. That means that it’s legal in many states but medical marijuana is considered just as illegal as cocaine, heroin and methamphetamines under federal law.

Has Your State Legalized Medical Marijuana?

California became the first state to legalize medical marijuana in 1996. Now, 33 states and the District of Columbia have approved medical marijuana.

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Other states include Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Washington and West Virginia.

The U.S. Drug Enforcement Administration (DEA) no longer considers hemp illegal because of a change in the 2018 Farm Bill, so hemp-derived cannabinoid or CBD products are legal across the nation.

Marijuana-related businesses are confronted with an array of high risks and obstacles including theft, general and product liabilities. And if you’re a medical marijuana user, you may face difficulties with worker’s compensation, pre-employment drug screening tests and companies that offer medical coverage may also have policies that prevent cannabis use to treat some health conditions. You may also find it tough to get auto insurance coverage because states currently don’t have a way to determine on-the-spot impairment as they do with alcohol.

Medical Marijuana Uses

Medical marijuana is used to treat a number of health conditions such as Alzheimer’s disease, appetite loss, cancer, Crohn’s disease, eating disorders like anorexia, epilepsy and glaucoma. As a treatment, it also can ease symptoms from mental health conditions such as post-traumatic stress disorder and schizophrenia.

Research suggests that medical marijuana can help treat multiple sclerosis, muscle spasms, nausea, chronic pain and wasting syndrome. All medical uses for medical marijuana have not been scientifically proven. The strongest evidence for its therapeutic benefits are its ability to help reduce chronic pain. It also may ease nausea and vomiting after chemotherapy treatments and spastic pain affecting multiple sclerosis patients.

Researchers suggest cannabinoids including tetrahydrocannabinol (THC) may help reduce anxiety, inflammation that causes pain and muscle tightness. It also is believed to kill cancer cells and slow the growth of tumors.

The FDA recently approved the drug Epidiolex, made from CBD, which helps seizure sufferers. Medical marijuana users can consume the product in a variety of ways: inhaling, eating it in a brownie, cookie or other food, or rubbing it into the skin with lotions, sprays, creams or oils.

Insurance Companies that Cover Medical Marijuana

Evidence is mounting that medical marijuana is an effective treatment for an array of health conditions, from chronic pain to cancer to post-traumatic stress disorder but it generally isn’t covered by health insurance.

Dozens of American insurance companies cover property, automobiles, commercial cannabis businesses such as grow operations and marijuana security companies. Some offer forms of coverage in only 1 state and others offer coverage in all states.

For instance, AllSmok Insurance covers cultivators, dispensaries and growers in all 50 states and Cannabis Insurance Services covers the liabilities for dispensaries, cooperatives, events, doctors and clinics in 5 states: Arizona, California, Florida, Nevada and New Mexico. On the other hand, Corcoran & Havlin Cross Insurance only covers growers, stores and crops in Massachusetts.

With an increasing number of users, growers, dispensaries and doctors who prescribe medical marijuana to treat illnesses and maladies, insurance companies are working to modernize their policies. Users and cannabusiness owners should be aware that as insurance companies grapple with so many new issues, more complex questions are arising than straightforward answers. 

For example, a recent national study revealed that men were more likely than women to use marijuana medically and recreationally, and become dependent on marijuana. It raises questions about different types of insurance coverage such as health, auto, and life, and how gender factors into insurance rates.

When it comes to life insurance rates, studies show smokers may pay as much as 215% more for life insurance coverage than nonsmokers. But age and health status also heavily factor into rates.

So when a typical question on a medical insurance policy application such as “Do you smoke?” arises, for a medical marijuana user who sometimes vapes and smokes with a pipe, but doesn’t smoke tobacco cigarettes, it’s not an easy “yes” or “no” answer. Many marijuana users do not know how to honestly answer such a question because they are not a tobacco user.

There’s a good reason for that. Health and life insurance policy rates may increase when marijuana users, whether medically or recreationally, acknowledge it with insurers. Depending on the condition for which they are being treated, medical marijuana users who are being treated for a mild health condition such as insomnia may be offered non-smoker rates.

However, medical marijuana patients who are being treated for more severe conditions such as cancer may see an increase in their health insurance rates.

Recreational users also may see increases in their life insurance rates if they acknowledge it with their life insurance carrier.

The amount and frequency of users may play a major role in determining if a user will see increased tobacco rates. Insurance companies may consider other risks because recreational marijuana use can be associated with recreational use of alcohol, other drugs and risky lifestyle behaviors.

Some of those risky behaviors also may lead to driving under the influence of marijuana or impairment, which can affect auto insurance rates.

Men were more likely to use marijuana, but they also were found 47% more likely than women to drive under the influence of marijuana, a 2017 National Survey on Drug Use and Health reported.

It is illegal to drive while impaired no matter what the substance, including marijuana for medical or recreational use. Law enforcement officers currently don’t have a reliable test to determine the level of THC impairment. So they can place a user under arrest based on observed impairment, which is a matter of opinion and highly subjective.

Just like laws concerning marijuana vary from state to state, so do penalties for marijuana-related DUI. Like alcohol-related driving convictions, penalties for marijuana-related driving convictions can range from a traffic ticket, suspension of license, substance abuse treatment and probation.

If the driving offense leads to the injury or death of another person, auto insurance policy rates likely will dramatically increase as much as double the previous amount the offender was paying. 

For instance, in July 2010, 12 of Barbara Tracy’s marijuana plants were stolen from her Hawaiian home. She filed a claim, and her insurance company offered her $8,800.49. She rejected the settlement, saying her plants and bad faith damages were worth $45,000.

The insurer argued against her claim because it said her plants were an illegal substance, which should not be covered. She sued, and eventually lost her case because the court sided with the insurance company. However, court cases decided in several other states show outcomes strongly depend on whether judges decide if federal or state laws legalizing medical marijuana are the controlling law.

Homeowners should be aware that an insurance company could deny claims over-classification of a property as residential or commercial. That issue came up in a Colorado case, Weingarten v. Auto-Owners Insurance Company. Connie and Edward Weingarten sued and asked for a judgement against the insurance company because it had “denied their insurance claim which sought coverage for property damage due to an illegal marijuana grow operation.”

Auto-Owners argued the couple was not using the property principally as a residence, but as an illegal grow operation. Although the couple showed photos of furniture, electronics and personal belongings to prove they lived in the house, they acknowledged they used virtually the entire house to grow their medical marijuana plants. The Weingartens prevailed in court because the judge ruled that the insurance company was seeking a judgement based upon whether or not the couple used the house primarily as a residence. The couple proved it was.

Commercial-scale growers may face similar obstacles because insurance companies consider their businesses high risks for fire because of the large amount of electric configurations they need to safely grow and maintain their plants.

Very High Risk for Theft 

Noah Stokes, founder and CEO of OmniGuard Security, a marijuana security business in Oregon, shared, “I’ve never met anybody who grows marijuana who’s not been robbed; not just robbed once, but robbed multiple times.”

Thieves entered a grow facility through the roof at Green Earth Wellness Center in Colorado Springs, Co., stealing marijuana plants and damaging the roof. Green Earth filed a claim with Atain Specialty Insurance Company, which Atain denied on the grounds that marijuana is illegal at the federal level.

But the insurance company provided coverage to Green Earth for general liability and commercial property for marijuana plants. Green Earth sued for breach of contract, bad faith, and unreasonable delay in payment. The district court eventually ruled that Colorado laws governed the contract, not federal laws. Atain entered into the contract fully aware that Green Earth was a marijuana business and could not use federal illegality as a reason not to pay in the case.

Medical Marijuana Alternatives Covered by Insurance

The first step in finding medical marijuana alternatives is figuring out how to get health insurance. Health insurance typically covers only two medical marijuana alternatives.

Doctors can prescribe either dronabinol, also known as Marinol, as well as nabilone, which also is called Cesamet.

These two drugs, offered in pill form, contain a type of synthetic THC.

Nabilone is used to help give chemotherapy patients relief from nausea and vomiting during cancer treatments. Dronabinol is also used to control nausea and vomiting and may also help people living with AIDS improve their appetite.

Patients who do not have health insurance may find reasonably priced coverage from the best affordable health insurance and the best health insurance companies.

Outlook on Medical Marijuana and Insurance

The majority of insurance companies have been slow to enter the medical marijuana insurance market because of complications with regulations, legal cloudiness and the shortage of data on the effectiveness and long-term effects of medical marijuana.

Experts believe that major insurance carriers won’t begin to delve into cannabis coverage until federal laws change and no longer classify medical marijuana as an illegal substance. Nevertheless, broader public acceptance and an ever-growing number of states legalizing and decriminalizing medical marijuana could prompt more major insurance companies to consider offering coverage of marijuana for medical and adult recreational use.

The marijuana industry is one of the nation’s fastest-growing and revenue-generating sectors. So even if insurance companies never opt to offer insurance products in the cannabis market, they will be forced to understand the industry, and at least become familiar with new developments and laws on the local, state and federal levels.

Insurance carriers will also continue to explore the deeper impacts on property and the insurance industry.

The Future of Medical Marijuana and Insurance

Medical marijuana is legal in 33 states and Washington, D.C., and Puerto Rico, Guam and the U.S. Virgin Islands. That mean almost 200 million Americans have access to medical marijuana, but health insurance doesn’t cover it.

Homeowners and commercial insurance policy carriers haven’t been able to figure out which claims they will pay. Law enforcement officers don’t have a way of accurately testing for marijuana impairment, and no one is sure how that will impact auto insurance rates.  

A myriad of questions still lie at the intersection of marijuana and insurance, and it’s unclear when or how all those questions can be answered with marijuana still being federally classified as a controlled substance. 

sure how marijuana impairment will impact auto insurance rates. So many questions about life insurance also need to be answered.

With cannabis being legal in some form in 47 states now, including medical, recreational, CBD and hemp, the insurance industry is working on filling in insurance coverage gaps for marijuana consumers, workers and business owners who may not have insurance to help them recover if they have accidents, injuries, property damage or any situation personal and commercial would normally cover.

There are so many unanswered questions at the intersection of marijuana and insurance, industry leaders are calling it a haze of confusion. Lawyers, marijuana advocates and insurance industry leaders say it took time for marijuana legalization to take place, it will take as longer to iron out all the questions the changing marijuana legislation has raised.

Just as the number of people using marijuana is increasing and legislation rapidly is changing, so is the level of uncertainty. Until the National Association of Insurance Commissioners 

When the legislation changed, medical marijuana advocates believed getting the laws changed was only the tip of the iceberg and the beginning of the work that needed to be done. Now advocates say that marijuana must be decriminalized on the federal level before insurance carriers gain enough clarity and confidence to begin allowing medical marijuana to be covered by health insurance.

Insurance experts need more clarity to begin paying more insurance claims, and law enforcement officials 

It took many years to get marijuana legislation passed in states, so it will take time and patience for federal laws to change. With that health insurance policies will be modified along with laws that will impact auto, two-thirdsAs medical and recreational marijuana use continues to spread, so are the unanswered questions arising about insurance coverage. Some experts in the insurance industry are calling it a haze of confusion.

Money matters: More states are legalizing medical and recreational marijuana, and that increases potential tax revenue. For example, states like Colorado and Washington have generated more than $200 million in tax revenue in a single year. 

Workers’ compensation has already started to cover medical marijuana and employer-based company plans also could be altered to cover medical marijuana. Those company plans could offer more flexibility and options because they tend to be smaller. Employer plans are expected to be pioneers in widespread coverage.

Some of those national employer plans could begin to cover medical marijuana as they would any other prescription drug. Some insurers might offer marijuana in a prescription plan, and those plans could become separate from a main insurance policy and cover only the cost of prescription drugs.

Employees may have more protections under the law in the future. In many states, employers still have the right to rescind job offers or find potential employees disqualified to work if they test positive for marijuana in pre-employment drug screenings. Nevada became the first state to prohibit employers from disqualifying job candidates who test positive for marijuana is a pre-employment drug test. That law will become effective in 2020.

In some states that have legalized medical marijuana, employees who are authorized to use medical marijuana cannot be fired for testing positive on a drug screening. But those protections are not universal. If medical marijuana receives FDA approval and coverage from large national insurance companies, an increase in protections for medical marijuana patients could be expanded.

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