What Does Medical and Recreational Marijuana Legalization Mean for the Commercial Insurance Marketplace?
In connection with this month’s elections nationwide, ballots in nine states included initiatives to legalize the use of medical or recreational marijuana. All but one of the ballot measures passed.
With the relaxation of drug laws nationwide and dispensaries popping up rapidly, commercial property insurers have available to them amazing new business opportunities. This is especially so because dispensaries are aware they are at significant risk of theft and fire. Last week, Law360 explored this very topic, concluding that due to concerns resulting from the federal Controlled Substances Act’s listing of marijuana as a Schedule 1 drug, only a limited number of specialty insurers have entered this market.
Nonetheless, larger and more established excess and surplus insurers that are reluctant to enter the market due to uncertainty about the interplay between state and federal law should know this: There is already case law indicating insurers can pay benefits for marijuana losses. See Green Earth Wellness Ctr., LLC v. Atain Specialty Ins. Co., 163 F. Supp. 3d 821 (D. Colo. 2016). Hence, now is the time for insurers to at least consider developing a program or product tailored to the needs of marijuana business, as the U.S. marijuana market continues to represent a potential source of dynamic growth for insurers.
Below, we outline the results and some specifics of the marijuana initiatives voted on this year.
Medical Marijuana on the November 2016 Ballot
Voters in Arkansas, Florida, Montana, and North Dakota passed their respective state’s measure to legalize medical marijuana. Specifically,
- Arkansas voters passed an amendment to the state’s constitution, legalizing the distribution and possession of medical marijuana for any of 17 qualifying conditions. Notably, a similar amendment was struck down in 2012 in a vote of 51.4 percent to 48.5 percent, as compared to 53.2 percent to 46.8 percent in the 2016 election.
- Florida voters passed the Florida Medical Marijuana Legalization Initiative in a vote of 71.31 percent to 28.69 percent. In short, the constitutional amendment legalizes medical marijuana for individuals with certain debilitating medical conditions as determined by a licensed Florida physician. This amendment becomes effective on January 3, 2017.
- Montana voters passed the Montana Medical Marijuana Initiative in a vote of 57.64 percent to 42.36 percent. Notably, the new statute repealed a requirement that medical marijuana providers have three patients or fewer and allows doctors to prescribe marijuana to patients diagnosed with chronic pain or post-traumatic stress disorder.
- North Dakota voters passed the North Dakota Medical Marijuana Legalization Initiative in a vote of 63.8 percent to 36.2 percent. The measure allows for the medical use of marijuana for certain defined conditions, including cancer, AIDS, hepatitis C, ALS, glaucoma, and epilepsy. It becomes effective on December 8, 2016.
Given the results of the November 8 election, medical marijuana is now legal in 28 states and the District of Columbia.
Recreational Marijuana on the November 2016 Ballot
Similarly, voters in California, Massachusetts, Nevada, and Maine passed their respective state’s measure to legalize recreational marijuana. Specifically,
- California voters passed the California Marijuana Legalization Initiative in a vote of 56.14 percent to 43.86 percent. Under the new statute otherwise known as Proposition 64, recreational use of marijuana for adults 21 years or older is now legal. Proposition 64, however, still imposes limitations on where qualifying adults may legally smoke and possess marijuana. This measure became effective on November 9, 2016.
- Massachusetts voters passed the Massachusetts Marijuana Legalization Initiative in a vote of 53.57 percent to 46.43 percent. This statute allows adults 21 years and older to possess, use, distribute, and cultivate marijuana in limited quantities, thereby decriminalizing such activities. This measure will become effective on December 15, 2016.
- Nevada voters passed the Nevada Marijuana Legalization Initiative in a vote of 54.47 percent to 45.53 percent. Following the passage of this statute, any person 21 years or older may purchase, cultivate, possess, or consume a certain amount of marijuana or concentrated marijuana and manufacture, possess, use, transport, purchase, distribute, or sell marijuana paraphernalia. Nevada’s statute becomes effective on January 1, 2017.
- Maine voters passed the Maine Marijuana Legalization Measure in a vote of 50.17 percent to 49.83 percent. Adults 21 years and older may now possess, use, and transport marijuana in Maine. This measure will take effect 30 days after Governor Paul LePage proclaims the results of the election.
Since the November 8 election, there are now eight states — Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington — in addition to the District of Columbia, where recreational use of marijuana is legal.
Nevertheless, Arizona voters narrowly defeated its measure to legalize the possession and consumption of marijuana by adults 21 years and older in a vote of 51.78 percent to 48.22 percent. Although medical marijuana was legalized in 2010, recreational use in Arizona remains illegal.
If you have questions about the impact of these developments, please contact:
- Jonathan L. Schwartz (312.572.8411; email@example.com)
- Or another member of Goldberg Segalla’s Global Insurance Services Practice Group.
November 30, 2016