4-1-1 on Comp: Marijuana Dispensaries and Workers' Compensation

Honolulu, HI (WorkersCompensation.com) - Even though many states have legalized marijuana on a recreational or medical basis, there is still a lot of confusion regarding how marijuana dispensaries are to operate in such a legal gray area.

As you read this, both President Donald Trump and Senator Elizabeth Warren have put forth measures which will decriminalize marijuana at the federal level. However, neither of those measures have inured as of yet. Click here for recent WorkersCompensation.com coverage of Michigan Supreme Court’s ruling regarding employers, coverage and medical marijuana.

As of now, marijuana is still a schedule I substance, right alongside drugs like heroin, ecstasy, and LSD. Yet, in the many states that have legalized marijuana, dispensaries must undertake the awkward task of engaging in a business that is legally questionable at the federal level.

For example, in Hawaii, Employers’ Mutual Insurance Co. (HEMIC) recently canceled insurance for seven medical marijuana dispensaries over these kinds of legal issues. The company cited concerns over criminal liability as justification for the decision. 

“We’re not providing an opinion or moral judgment on someone’s use of marijuana or not, and we’re certainly not taking a position opposed to the value of medicinal marijuana to treat certain medical conditions or chronic pain. This was really simply a legal decision,” said HEMIC Chief Executive Officer Marty Welch.

He continued, "HEMIC has received two outside legal opinions regarding its role in providing workers' compensation coverage to Hawaii's medical marijuana dispensaries. These legal opinions clearly acknowledge that HEMIC and its board of directors have potential exposure for criminal liability based on federal law applicable to marijuana businesses. After receiving these legal opinions, the HEMIC board has voted unanimously to discontinue these policies and fully refund all premium payments to any dispensaries currently insured by us." 

It’s unclear what the insurance company was referring to regarding their view of the potential criminal liability. However, they could be referring to conspiracy. It is not legal to aid someone in a criminal enterprise. Since marijuana is illegal at the federal level, one could see how that could be a worry for the insurance company.

In contrast, states like Pennsylvania require that dispensaries “obtain and maintain workers’ compensation insurance coverage for employees” when they are considered operational. 28 Pa. Code 1141.44(b). 

This uncertainty has created a business opportunity for companies like Cover Cannabis, a California insurance company that specializes in providing insurance coverage for the cannabis industry.

The precedence this sets for all business owners operating marijuana dispensaries is quite problematic. This creates the possibility that any marijuana dispensary could have its workers’ compensation insurance pulled from at any moment until the federal government clarifies its position on the plant. 

Imagine a situation where a dispensary has their workers’ compensation coverage pulled from them like similar to Hawaii. Dispensaries have many positions where workers could be injured such as farmers, gardeners, laborers, drivers, growers, budtenders, or cooks. If one of these workers was seriously injured and the date of accident fell after coverage was pulled, both the injured worker and the dispensary could have serious problems. The injured worker would have issues because there is no insurance company with a deep pocket to cover the medical bills and the dispensary would have to take the financial hit of having to pay for the Claimant’s medical and indemnity, which could reach into the millions if the worker is permanently and totally disabled.

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