On October 29 PLUS hosted a webinar on “The Growing Insurance Issues with the Rise of Medical and Recreational Marijuana.” PLUS members can view that webinar in the Multimedia Library. Below, several panelists from the session respond to audience questions on the topic.

What impact would legalization at the Federal Level have?

Mike McGrory – “Legalization” could mean many things, from rescheduling cannabis as a prescription-like drug to outright legalization with regulation, like cigarettes or alcohol or any other number of products. Any one of these steps would have a tremendous effect on the medical cannabis industry. Certainly, the market and industry would be likely to grow significantly. And, importantly, banks, insurers, etc. would feel more comfortable partnering with the industry. Perhaps most interestingly, from a medical perspective, “legalization” would permit traditional testing to be done on the effectiveness of cannabis as a medical treatment.

Mark Passerini – In addition, legalization would mean a re-focusing for law enforcement officials.  Currently, every 42 seconds someone in the USA is arrested for marijuana use or possession.  This means our police can focus on real crimes, our prison population will decrease, and our streets will be safer due to the minimized presence of the drug cartels.

A Federal position change would allow for major capital to flow into this industry and things will start moving into hyper speed.

By 2020 estimates show that the industry will employ over 300,000 Americans and be valued at over $15 billion.  Some states will lag behind (remember that Mississippi did not repeal alcohol prohibition until 1966) and it will be costly to their economies due to lost tax revenue.  The insurance sector is poised to profit greatly on this industry and should lead the charge to force a shift in federal policy!


Mike McGrory – This is going to vary state-to-state. I am not aware of any laws pertaining to whether a registered patient can hold a driver’s license, though there are laws restricting a patient’s ability to drive while under the influence. There are also exceptions in some laws that preclude people, such as law enforcement officers, from becoming registered patients. Interestingly, given the federal/state conflict, there are issues with respect to whether federal employees are permitted to become registered patients.

For insurance companies that cover these risks, is there a federal legal issue over collecting premium “across state lines?”

Mike McGrory – I am not aware of any governmental agencies enforcing this restriction against insurers; however, it is an issue, and it is certainly one of the matters insurers (and banks) have considered in deciding whether to partner with the medical cannabis industry.

From a general liability and products liability standpoint, what are the significant differences in recreational vs. medical exposures?

Deb Goldberg – The real difference between exposures for recreational marijuana distributors and medical marijuana dispensaries lay in the professional liability exposures.  From a products standpoint, the exposures are very similar.  From a general liability standpoint, there may theoretically be some additional premises exposure due to the expanded customer base – these tend to be more often store front operations with an increase in foot traffic when compared to medical marijuana dispensaries.

What happens if the new president elected in 2016 decides to change the federal stance on this and begins enforcing the federal law of the illegality of cannabis on all levels?

Mike McGrory – This is really the biggest uncertainty in the industry. Certainly, the tide seems to be heading in the opposite direction—towards more liberal cannabis laws. However, should the federal government reverse course, the industry’s remarkable growth would surely stall. The Cole Memo has been a great source of comfort for industry investors and entrepreneurs, so its rescission would cause people to rethink involvement in the industry. However, there were industry pioneers before the Cole Memo, so I would not go so far as to predict the industry’s demise.


Mike McGrory – The answer to this is really going to depend on the lawyer disciplinary bodies for each individual state. Illinois’ law does not prohibit attorneys from becoming registered patients, and does include some employee protection for registered patients. However, Illinois’ law is silent as to this question and, it is not out of the realm of possibility that a disciplinary board could take the position that an attorney who has violated federal law should lose his or her license despite compliance with state law. This is just another one of those questions that will likely be answered over time.