Will insurance cover your marijuana if it's stolen from your home? Will it cover you if you use it as part of your treatment for a disease?
In a nation where 28 states and the capital in D.C. have legalized marijuana for various uses, that's a question worth asking on 4/20.
Colorado, Washington, Alaska, California, Maine, Massachusetts, Nevada and D.C. have all legalized marijuana for recreational use. Those states and Arizona, Montana, North Dakota, New Mexico, Minnesota, Michigan, Illinois, Ohio, Arkansas, Louisiana, Florida, Maryland, Delaware, New Jersey, New York, Vermont, New Hampshire, Connecticut, Rhode Island, Florida and Hawaii have all legalized it for medicinal use. However, the federal government still considers possession and use of marijuana illegal, and even the states where it is legalized for use have vastly different laws governing it.
That hasn't exactly clarified matters for insurers or their clients, but it has produced some solutions in that time. In 2014, Amy Allmon, a spokesperson for Allstate in Colorado, issued written statement saying that her company considers marijuana "just like any other personal property that is not subject to a specific exclusion or limitation with the policy…At this time there is no additional policy premium associated with marijuana."
In that state, marijuana is included under the personal property limit of the homeowners policy. If there is an accidental fire and a homeowner's stash burns in that fire, that's covered, too. Plants grown for licensed personal use would receive the same coverage as trees, shrubs, plants and lawns to the limits legally allowed.
Determining the value of said stash isn't easy, however. In Hawaii back in 2012, homeowner Barbara Tracy grew plants for medicinal use. When 12 plants were stolen, she submitted a claim to USAA for $45,600. USAA initially agreed to pay Tracy $8,801, but Tracy sued on the grounds that the insurer was undervaluing her claim. USAA countered that since marijuana is considered by federal authorities as an illegal Schedule I substance (similar to heroin or morphine), it didn't have to cover the loss at all. The court agreed, determining that Hawaii law didn't supersede U.S. law and that marijuana still qualified as an illegal substance.
Other states are a bit more lenient. In Oregon, for example, the Control, Regulation and Taxation of Marijuana and Hemp Act states, "No contract shall be unenforceable on the basis that manufacturing, distributing, dispensing, possessing or using marijuana is prohibited by federal law." In Connecticut, meanwhile, the medical marijuana possession limit of 2.5 ounces would amount to a loss of less than $1,000; or less than an insurance company would contend. However, in what Arcview Market Research considers a $6.7 billion legal marijuana market, those costs can add up quickly.
Insurance companies are also attempting to determine whether or not they can charge marijuana users smokers' rates for life insurance -- which is roughly four times higher than non-smokers' rates, according to insurance pricing site InsuranceQuotes.com. Prudential doesn't consider medical marijuana users in the same risk pool as smokers if they have an overall healthy lifestyle. However, if that same marijuana user has a history of cancer or is being treated for multiple sclerosis, that rate would rise based on the pre-existing condition.
That isn't to say that insurers don't get a bit judgmental about how you're using marijuana.
"For underwriting consideration, the first thing we must determine is whether the use is recreational, or if the proposed insured had been issued a prescription for medical use," Pinney Insurance underwriter Mike Woods told InsuranceQuotes. "If it's for medicinal purposes, underwriting is going to be looking to the specific issue that the marijuana is being used to treat."
Because cannabis still contains carcinogens and can be linked to some cancers, some insurers will go with the smoker's rate for recreational users. Oh, and because of marijuana's federal designation as a Schedule I controlled substance, it not only isn't approved for treatment by the FDA, it's a tough substance to research. As a result, health insurance providers can't reimburse patients for its use.
Even folks selling marijuana legally under state laws might also be treated with skepticism by insurers, who may be loathe to cover their their businesses. Liability insurance would cover accidents on the premises, but product liability for businesses that sell edible marijuana products is another story. Insurers are only somewhat comfortable with the idea -- with specialized insurers like Cannarisk in Seattle filling in the gaps -- but the increased trend toward legalization may be changing some minds.
"Once carriers can properly assess what their risk is and know how the judicial system will defend the policies, it will be much easier for more major carriers to enter the market," Tim Davis, a workers compensation, told InsuranceQuotes.com.
The one place where insurers are clear about their stance on marijuana is under auto insurance coverage. If you're driving under the influence of marijuana and get caught, you're getting hit with the same penalties as folks charged with DUI for drinking and driving.
"With the higher prevalence of marijuana in the world, what we're seeing is a sort of denial of the fact that marijuana can be impairing," says Chris Cochran, spokesperson for California's Office of Traffic Safety. "Marijuana is not a benign substance when it comes to driving ability. It throws off your perception of time, loosens inhibitions, and changes reaction times. We can't just say, 'Oh, people who are high drive slower and nicer.'
"Anything you put into your body that will alter your brain chemistry is potentially impairing and dangerous behind the wheel," he adds.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.