Known scientifically as cannabis and commonly referred to as weed, pot, and many other slang terms, marijuana is one of the most widely used recreational drugs in the US today, and is also used in the treatment of various medical disorders.

According to the National Survey on Drug Use and Health (United States, 2002-2014), the 18-34 age group has the greatest incidence of marijuana use. What is important to note, however, is the 55 plus age group is showing the greatest increase in use. Males outnumber females in use by 2 to 1.

At present, marijuana is legal for recreational use in nine states and the District of Colombia, and for medical use in 29 states and the District of Colombia. Though its use is widespread, marijuana is still an illegal drug under federal law, and life insurance carriers are struggling with how to handle marijuana use for underwriting purposes. Aligned with the data showing usage is on the rise, one large insurance lab recently reported their hit rate increased to 5% of those tested over the past three years.

While many carriers continue to be fairly conservative in their underwriting of marijuana, we are seeing aggressive postures with some. These more open approaches are proving to be valuable as we evaluate medical and recreational users, and even those applicants employed in the marijuana industry who seek personal needs coverage.

As with any new underwriting criteria, marijuana underwriting will continue to evolve as state and federal laws change and marijuana mortality emerges. Below is some useful information on marijuana and carrier underwriting positions that exist today.

What risks are there in the use of marijuana?

Several risks have been attributed to the use of marijuana in its various forms — smoking, vaping, eating, oils, waxing, etc. Risks commonly brought up include cardiovascular disease, cancer, lung disease, mental illness, cognitive dysfunction, drug tolerance/dependence/abuse, and other maladies. There are also risks associated with operating an automobile or activities that involve a degree of coordination and awareness. However, while there is anecdotal evidence and even some hard data supporting these impairments, the true long-term risks are unknown. It will be some time before mortality emerges and becomes clear enough to understand the risks presented by marijuana.

How do carriers identify marijuana use?

Many if not most carriers believe marijuana use is under-reported and a hit or miss proposition. The typical ways for identifying marijuana use include asking a question on the application, finding incidence of use in an APS report, and discovering marijuana in an insurance urine specimen.

To offer the best rates possible, carriers require complete candor during application completion. Carriers may rate and in some cases decline if evidence of use is discovered in a urine specimen or APS without prior application disclosure.

At present only a minority of companies test for marijuana during the insurance exam process, but that number is increasing—along with the marijuana positivity rate.

How do carriers approach medical marijuana use?

There is no consistency for qualifying conditions in the states that have approved medical marijuana, although typical uses include arthritis, chronic pain, Crohn's disease, seizure disorders, fibromyalgia, migraines, nausea due to chemotherapy, terminal illnesses and other illnesses and diseases.

Patient access to medical marijuana often follows this path:

1. A physician visit is required to acquire certification for a qualified condition that may benefit from medical marijuana. Included is a history and physical along with informed consent to understand the risks and benefits of marijuana. The physician cannot legally prescribe marijuana, only certify its benefit.
2. Medical marijuana is obtained from a dispensary or treatment center. It cannot be dispensed by a pharmacy due to being an illegal Schedule 1 drug

Carriers typically underwrite medical marijuana on the condition(s) for which it is prescribed, with one industry carrier offering as favorable a classification as preferred nonsmoker in certain situations. Most often, though, carriers will consider standard or standard plus at best, with some offering smoker rates if marijuana is being smoked. In addition, carriers require that medical marijuana use be indicated on the insurance application, often require an APS from the dispensing facility, and watch closely for any adverse medical, driving or financial histories.

How do carriers approach recreational marijuana use?

As with medical marijuana, there are differences in how individual carriers view recreational marijuana use. Often the best rates are offered to very infrequent, minimal users who have no associated adverse drug, alcohol, driving or psych histories. In addition there may age limitations, with some carriers only willing to offer acceptance to those age 21 and older.

At present, for social use up to one time per month or less, one industry carrier will offer top preferred nonsmoker rates. The same carrier will also offer preferred nonsmoker for use up to two times per week or less.

However, the carrier landscape is mixed with most offers for recreational marijuana use varying from standard to standard plus at best. In addition, like medical marijuana use, some carriers differentiate between smoker and nonsmoker rates depending upon whether marijuana is smoked or ingested.

What about people who work in the marijuana industry, will any carrier insure these applicants?

Since marijuana is illegal on a federal basis as a Schedule 1 controlled substance, carriers will typically not offer coverage to anyone employed in the legal growing, manufacture, distribution or sale of marijuana/cannabis—whether as a business owner, employee, consultant or associated with a medical clinic dispensing medical marijuana.

However, there is one industry carrier today that will consider these individuals for personal coverage—not business coverage—if an applicant's background and circumstances are acceptable. In addition, this same carrier may allow any amount of coverage the insured may qualify for, up to best nonsmoker rates. The carrier needs to evaluate specific information before considering an application for coverage, including:

• A cover letter overview of the business
• Verification that the business has its own bank account
• The proposed insured's role within the company including any ownership
• Confirmation that premiums are paid from a personal account, and the source of the premium dollars
• The purpose of coverage with a clear indication that it is for personal needs (the business will not be involved in the coverage)
• Financial and Drug questionnaires, tax returns, APS information and the usual age/amount requirements

Bottom line, this is an incredible opportunity when coming across potential applicants associated with the marijuana industry!

If you would like to learn more about carrier marijuana practices, please contact us at Windsor. We keep our finger on the industry pulse and are always here to help!