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Medical marijuana: A burning question

Legalization in more states will lead to insurance questions

By Michael J. Moody, MBA, ARM

The past few years have seen a marked increase in states approving the use of medical marijuana in certain situations. To date, 14 states, plus the District of Columbia, have decriminalized the use of marijuana in cases where its use can be medically justified. 

This move to legalize medical marijuana has been growing steadily since 1996, when California became the first state to approve the use of marijuana for medical purposes.  The other states are Alaska, Arizona, Colorado, Hawaii, Marine, Maryland, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont, and Washington.

The use of medical marijuana in the United States dates back farther than you might think. In fact, before 1937, at least 27 medicines contained some form of marijuana and were legally available throughout the country. Many of these drugs were manufactured by well-known companies like Squibb and Eli Lilly. That all changed with passage of the Marijuana Tax Act of 1937, which imposed a federal prohibition on marijuana.

The use of marijuana for medical purposes took another hit with the enactment of the Controlled Substances Act of 1970. This federal legislation placed every illegal drug and prescription drug in one of five categories known as "schedules." Marijuana was classified as a Schedule 1 drug, which was defined as having a high potential for abuse, and it was deemed to have no acceptable medical use.  Forty-some years later, marijuana is still a Schedule 1 controlled substance under federal law.

States go it alone

In addition to the 15 jurisdictions mentioned above, at least 12 other states have pending legislation that would legalize the use of medical marijuana: Connecticut, Delaware, Idaho, Illinois, Iowa, Kansas, Maryland, Massachusetts, New Hampshire, New York, Oklahoma, and West Virginia. Further, Mississippi, Texas, and Florida are moving toward a more favorable view of medical marijuana but are not yet taking steps to legalize its use.

Understandably, there is little continuity among the statutes in the jurisdictions that have legalized the use of medical marijuana. In fact, the patchwork of individual state laws represents a thorny problem for corporate risk management and human resource professionals. Even more problematic is the fact that these statutes are in direct conflict with the federal law that bans the use of medical marijuana under any circumstances. The federal stance was softened, however, when the Obama administration signaled its intent in an October 2009 memo from the U.S. Justice Department to all U. S. Attorneys, advising them not to focus federal resources on individuals whose actions are in clear compliance with existing state laws that permit the medical use of marijuana. 

Impact on insurance

The effects of using marijuana for medical purposes are many and varied, and they can be expected to have a significant impact on insurance, especially health insurance and workers compensation. 

First, it is difficult to argue against the effectiveness of marijuana in a number of medical situations. Among the well established uses are for HIV/AIDS, certain forms of cancer, multiple sclerosis, glaucoma, and chronic pain.

The use of marijuana for medical purposes also has a number of adverse effects, and not much is known about the impact of long-term use. 

According to Steven Weisbart, Ph.D., CLU, senior vice president and chief economist for the Insurance Information Institute, "Treating some conditions that may arise in a work comp environment could mean that outlays would probably increase in the short term." He points out, however: "If there is a benefit to using medical marijuana and workers can return to the job more quickly, then overall there might be a reduction in the combined medical expense and wage replacement costs." Weisbart cautions, however, "It is hard to indicate in advance whether this would be a net adverse or net positive outcome." Depending on the situation, he says, "It could easily go to improving the situation for both the injured employee as well as the employer."

Researchers continue to explore ways to control health care costs and to study the effects of drugs that may assist in bringing injured workers back to the workplace. "The entire environment in terms of the use of medications is already starting to change," Weisbart says. Much of this change, he says, has been spurred by the health care reform act that was passed by Congress last year. The results of further research, Weisbart comments, will help medical practitioners "to better decide where use of marijuana, as well as other drugs, can be most effective and which patients can benefit the most." 

Whatever approach a state takes with respect to legalizing medical marijuana, the risk management implications will be significant. Weisbart points out that the key is getting a worker back on the job as quickly as possible, "as long as he can perform safely and productively." He goes on to note that "as long as the use of medical marijuana is kept in a medical environment that is closely monitored by a qualified medical professional," this should be no different than the use of any other drug.

The use of medical marijuana will also involve employee health insurance. Another challenge is how its use will be addressed in the "zero tolerance" drug programs in effect at many workplaces. A widely publicized instance involves a worker in a Wal-Mart store in Michigan who had been using medical marijuana. The employee sustained a minor injury at work and was required by corporate policy to submit to a drug test, which he failed. The worker had obtained all the necessary legal documents to use medical marijuana and was in full compliance with the state requirements; however, he was still fired. He sued Wal-Mart for wrongful termination. At this writing, Wal-Mart has won the first round of court appearances, but many people believe this case will ultimately end up in the U.S. Supreme Court.   

Summing up

Although some states have had enabling legislation on their books for over a decade, it appears that we are no closer to concrete answers about medical marijuana than we were in 1996. One thing is certain: both patients and physicians increasingly are looking to marijuana as a treatment for a number of medical conditions. Marijuana is no wonder drug, but apparently it can provide needed assistance that other medical options cannot. Additionally, medical marijuana can offer relief at a significantly lower cost than traditional and less effective drug regimens.  

As mentioned, the use of medical marijuana gives rise to a number of insurance and risk management issues. Insurance buyers will continue to look to their agents and brokers to assist them in this important and growing coverage area. 

Like it or not, it appears that the use of medical marijuana will continue to become more common in the treatment of disease as well as in pain management programs. Agents and brokers would be well advised to follow the trends in their states as well as national trends that may affect their clients. Providing input so that clients can discuss and strategize regarding the status of medical marijuana can be a significant value-added service.


"The entire environment in terms of the use of medications is already starting to change…spurred by the health reform act that was passed by Congress last year."

—Steven Weisbart, Ph.D., CLU
Senior Vice President and Chief Economist
The Insurance Information Institute











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