The legalization of cannabis and related products has the insurance industry scrambling. We recently tuned in to a webinar on this topic hosted by Claims Magazine and Propertycasualty360.com. While it didn’t answer questions definitively, it did provide an update on what’s happening in this area and some of the issues employers need to consider.
The first speaker was Patrick McManamon, the CEO of Cannasure, which is a leading insurer of cannabis and hemp businesses. He explained that medical marijuana is legal in 33 states, Guam, Puerto Rico and the District of Columbia. Recreational marijuana use is legal in 11 states and D.C. These numbers are changing constantly.
Meanwhile, sales are still illegal at the federal level; marijuana remains a Schedule 1 drug. That means it’s classified as having no currently accepted medical use and a high potential for abuse. It’s right up there with heroin, LSD, ecstasy and meth.
The dichotomy between state and federal treatment is responsible for many of the difficulties when it comes to managing risk around marijuana use. It affects nearly every category of insurance, including auto, property and casualty, Workers’ Compensation, product liability, health, life and directors and officers.
Demand for cannabis products is growing rapidly. By some estimates, legal spending worldwide is at nearly $15 billion and will reach $40 billion in the next five years. In one analysis of the estimated sales for recreational cannabis, it comes in second – behind wine and just ahead of pizza!
Forms and products are changing
Popular forms of the substance are changing rapidly. While the “flower” or “bud” form of marijuana accounted for around 64% of sales in 2014, it dropped to around 40% in 2018, with concentrates and edibles accounting for larger shares.
Let’s take a minute to get the terms straight, with the help of Teresa Bartlett, MD, Senior Medical Officer for Sedgwick. Her firm is a leading global provider of technology-enabled risk, benefits and integrated business solutions.
Cannabis: The plant genus that includes three species: Cannabis sativa, Cannabis indica and Cannabis ruderalis. Both marijuana and hemp come from this genus.
Marijuana: A variety of cannabis that is a psychoactive drug. It can be smoked, vaped or eaten.
THC: Short for tetrahydrocannabinol, this is the chemical responsible for most of marijuana’s psychological effects on thinking, memory, pleasure, coordination and time perception.
CBD: Short for cannabidiol, CBD is a component of the cannabis plant that is not psychoactive. It is promoted for many health benefits.
Hemp: Another plant in the cannabis family that has lower levels of THC and higher levels of CBD. Industrial hemp is used to make rope, fabric, wax and cloth. The seeds and their oil are used in beauty and food products. They typically contain little to no THC.
A medical perspective
Dr. Bartlett explained that more than 183 million people worldwide use cannabis. And, while most medical professionals would say it’s less dangerous than alcohol, it does contain many cancer-causing agents and presents complicated law enforcement issues. Long-term use also may be associated with lower IQ. Reliable research is lacking, to say the least.
One of the most difficult issues for physicians in evaluating marijuana as a drug is the variability of the strains and their effects. Some, generally in the sativa species, produce an energetic “head high.” Those from the indica species are known for their relaxing properties. And strains from the ruderalis species have much lower THC and higher CBD components.
While dispensaries attempt to help buyers with some knowledge of the effects, strains are so crossbred that it’s difficult to provide a reliable evaluation. With little regulation or standardization, suppliers also are known to deliberately distort their reports of the ratios of ingredients and exposure to pesticides. This, combined with the lack of empirical research makes it nearly impossible for physicians to advise patients on the dosage, route or frequency of administration.
Both THC and CBD work on the body’s endocannabinoid receptors in the brain, central nervous system and immune system. The only related drugs currently approved by the Food and Drug Administration are Marinol, used primarily in cancer patients with wasting syndrome, and Epidiolex, a CBD-containing drug that is used to treat a rare epileptic seizure disorder. The FDA also has a medication on the fast track for approval that uses a balance of THC and CBD to treat neuropathic pain in patients with multiple sclerosis.
Implications for employers
With the increase in medical marijuana legalization, employers may consider whether to cover cannabis-based drug therapies in their medical plans. Based on the uncertainty about strains, concentrations and dosing, Dr. Bartlett suggested it would be almost impossible to know what to cover, how much and for how long.
Drug testing for cannabis is fraught with issues, too. Marijuana is stored in the fatty tissues and is slow to leave the body. It can remain detectable in the urine up to five days after use and in the blood up to six weeks later. Impairment also is difficult to predict or measure, with some delivery methods causing an immediate high and others stretching the effect out over hours. The level in the blood also doesn’t always correspond with the level of impairment, she said.
Ian Stewart, a partner with the law firm Wilson Elser Moskowitz Edelman & Dicker, noted several recent court decisions in the Northeast requiring reasonable accommodations for medical marijuana use, which challenged companies’ zero-tolerance policies. He and his colleagues also are seeing more challenges to pre-employment and random testing. They have not seen this affect safety-related jobs or federal roles, however. Important to note: Commercial drivers are regulated by federal rather than state laws, so driving with any amount of THC in the system currently results in complete license suspension.
Another complication to consider: New York and New Jersey judges have in a few cases required employers to pay for marijuana to treat Worker’s Comp injuries.
How should you accommodate the arrival of legalized medical or recreational marijuana in your workplace? The Miller Group’s Dennis Collins suggested in his February 2019 blog on drug testing that you may not need to adjust your policy at all – especially in safety-sensitive workplaces. “You don’t currently allow employees to work under the influence of alcohol or prescribed medications that can alter their ability to work safely and efficiently,” he said. “Now you can simply add medical marijuana to that list of influences.” If you do adjust your policy, however, he suggests you document it well and apply it consistently. That includes testing all parties involved in every workplace incident, regardless of whether they’re injured.
The lack of consistency in state and federal rules, industry regulations and the medical application of medical marijuana is likely to remain for some time, as regulators, the medical community, the insurance industry and employers wrestle with the topic. If you would like to talk through the implications for your company, we’re here to help.