Growth of the Marijuana Industry: Not Just Blowing Smoke

Sarasota, FL (WorkersCompensation.com) - Marijuana is big business. Despite its classification as a Schedule 1 drug under federal law, it generated $10 billion in spending last year and is projected to be a $13 billion industry this year in states where it is legal for medical and/or recreational use.

At least several states are reaping unexpectedly high financial benefits from legal sales of the drug. Nevada, for example, collected nearly $70 million in taxes in its first full year of legalization — 140 percent of what the state had anticipated, according to Patrick McManamon, CEO of Cannasure.

With more states looking to legalize the drug in some fashion and even the federal government toying with the idea, it appears the marijuana industry has nowhere to go but up. But the exponential growth of the marijuana business leaves many employers and workers’ compensation stakeholders struggling to keep up with the latest developments, protect their companies and keep their employees safe and healthy while treating them fairly.

Experts provided insight on the topic during a recent webinar on The Impact of Legalized Marijuana on Auto, Property & Casualty, and Workers’ Comp Insurance.

The Industry

Medical marijuana is legal in 33 states, the District of Columbia, Guam, and Puerto Rico — as of today. Eleven states and D.C. allow recreational use of the drug.

It is the most widely used drug behind alcohol and tobacco products, with an estimated 183 million people using it, according to Teresa Bartlett, M.D., senior Medical Officer for Sedgwick.

The two most prevalent strains of marijuana are sativa — “its claim to fame is it gives an energetic head high,” and Indica — “or, ‘in-da-couch.’ It provides more of a relaxing feeling and makes the person more sleepy,” Bartlett said. “There is a lot of cross breeding of the strains and it’s difficult to know what type you are getting.”

The strains typically have varying amounts of Tetrahydrocannabinol or THC, which produces the ‘high’ from the drug, and Cannabidiol, or CBD, which is believed by some to have various health benefits.

The drug can be consumed in many ways; smoked, vaped, eaten, dabbed, sprayed, put under the tongue, and applied topically. It can be purchased in many forms, such as a flower or bud, as a concentrate, oil or wax; and in a variety of edible forms such as breath mints, gummy bears, cookies, brownies, etc.

Where the ‘flower’ variety was the most widely purchased type just five years ago, “more concentrates and edible products are now coming on the market,” McManamon said. “New products are being developed all the time.”

These days, the drug is typically grown indoors in fully automated greenhouses. Technology regulates the temperatures, lighting, and watering and ensures proper monitoring and control.

Sales of marijuana have added to the coffers of states that have legalized it. According to McManamon 

• Colorado collected $792,874,219 in taxes and license fees from 2014 to July 2018
• Washington took in $875,088,051 in taxes between June 2014 and Dec 2017
• Oregon collected $157,925,717 taxes from Feb 2016 – April 2018

“We’re not trying to create a demand,” McManamon said, “it’s already there.”

Employer Concerns

Employees in states where marijuana is legal present a conundrum for employers. Absent any physical signs of impairment, such as slowed responses and reaction times and appearing off balance, it is difficult to know if someone is actually impaired by the drug.  Typical drug tests used by many organizations may not provide an accurate picture of an employee’s impairment, since the drug itself stays in the body long after its effects have worn off.

“If you only use the drug once in a while, it stays in the body for 1 to 5 days after use,” Bartlett said. “For a regular user, it can be found up to six weeks after use … it doesn’t mean the person is impaired.”

The issue is easier for employers with workers in safety sensitive positions, as they must be completely free of that and other illicit drugs to perform their jobs. But the issue is less clear-cut for other workers, who may fail a drug test but not be under the effects of the drug.

An even bigger issue is if and when employers/payers have to reimburse injured workers for medical marijuana.  In states that have legalized medical marijuana, providers may recommend the drug for patients in chronic pain. The research on the issue is still spotty, since the federal ban on the drug has hampered research activity.

But court decisions friendly to injured workers who use marijuana may increase. The speakers noted that in some states, in the Northeast in particular, injured workers request marijuana recommendations from their providers to treat their occupational injuries and, if they are denied, they take the issue to court.

“We’ve seen judges, especially in New York and New Jersey, say ‘it’s legal in my state, I’m appointed in my state and I think it’s reasonable for you to pay for it,’” Bartlett said. “From Sedgwick’s perspective, we look at the fact pattern of the claim itself and possibly-connected comorbidities to make sure it is a claim that would make sense for that or would not, and we put together the whole clinical picture for the judge to consider, rather than just [relying on] a doctor who saw the injured worker one time and recommends medical cannabis … In the past we said, ‘it’s not approved by the federal government so we can’t pay’ and judges didn’t care. Now we have a different approach.”

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