Jul 20, 2017
The Concklin Blog

Marijuana laws are rapidly changing how cannabis is regulated, and one in five Americans now lives in an area where recreational smoking is legal. This change is making new medical treatments easier to access and transforming how people perceive cannabis and its users. It is also impacting those in the insurance industry, as creating marijuana-related policies is uncharted territory for many.

Cannabis industry professionals need insurance

The cannabis industry is rapidly growing, and those in the field need insurance adapted to the specific needs of growers, retailers, and lab researchers. These issues include an increased risk of theft and vandalism as well as the danger of electrical fires caused by growing bulbs.

Business owners need to look for insurance providers whose policies specifically address marijuana cultivation or distribution and who are familiar with the specific needs of those in the industry. Legal marijuana-based businesses should prepare for the possibility that some companies may refuse to cover them or that their current insurance providers may suddenly drop them.

Cannabis use on business premises

Because cannabis is illegal under federal law but legal in several states, users can easily find themselves in gray areas. Obviously, using cannabis in a state where this drug is illegal can void some insurance claims, considering some policies have clauses excluding illegal activities.

Owners of establishments where patrons can consume cannabis should also take heed. Because most business liability insurance policies do not explicitly mention marijuana use on business premises, it’s important cafe, bar, and other business owners review and upgrade their policies if need be to ensure proper coverage.

Is legal marijuana making auto insurance more expensive?

In Colorado, Oregon, and Washington, vehicle collision incidents have increased 3% more than states where legal recreational marijuana use is illegal. Still, there is no formal evidence linking the two, and it is difficult to prove whether cannabis was involved in a collision since a user can test positive for use long after smoking.

Drivers should be concerned about their personal rates going up after getting into crashes or being caught driving while high, which can lead to DUI charges. Even though cannabis is legal in several states, many auto insurance providers consider driving after consuming marijuana to be an unsafe habit and, as such, they may cancel offenders’ policies.

The legal cannabis industry is worth $7.2 billion and is likely to grow at an annual rate of 17%. Until the insurance industry catches up with the unique needs this industry and its changing regulations, business owners might find it difficult to purchase insurance.