Cannabis Misconceptions, Intersection with Insurance, and the Ushering in of New Policy
Medical vs. Recreational Cannabis usage, the line seems clear - right? However, this is not always the case.
When one thinks of medical use, one may think of cancer, PTSD, migraines, Alzheimer's, among other things. While not everyone may face these, the thing we all struggle with is stress, to varying degrees, of course.
What many do not think of is the fact that stress can be alleviated by a medicinal use of cannabis, even if the individual is otherwise healthy - an assertion backed up by science. In fact, according to a team of researchers from Washington State University, people using cannabis had a 58% reduction in stress - especially cannabis high in THC and CBD. Hemp has been Federally legal since 2018, but contains substantially less THC than Marijuana. Albeit, the government disagrees.
In the words of Justin Ort, CEO of Measure 8 Venture Partners, “What we have realized over time is that the line between medical and recreational is inherently blurred, because even before medical cannabis existed millions of consumers world-wide used cannabis to help with stress, sleep, pain relief and countless other indications because through their own usage they independently recognized that it worked, and helped them significantly in these areas. Medicinal cannabis is essentially an offshoot and general recognition of the healing properties of the plant, but with research and acceptance the potential is limitless. At Measure 8, we believe cannabis has great potential in wellness applications and as an opioid replacement among other disruptors.”
In thirty-three states (plus the District of Columbia), medical cannabis programs exist, with an additional six states having legalized CBD products.
Given this, while medical cannabis may be available and legal for most Americans with illnesses falling under said qualifications, far fewer Americans have access to fully legal cannabis - only eleven states (as of November 2020 elections there are a total of 15 states), to be exact.
What option are these individuals left with, buying cannabis on the black market? Some states have approached the issue as allowing their citizens to make a "wellness choice," which is commonly believed by supporters of legalization to be the best avenue.
However, there are some differences in the experience of purchasing both:
Most dispensaries have a medical and recreational side.
There are limits to purchases for both recreational and medical (also in regards to plant counts).
There are added complications for minors applying for medicinal use.
One thing, however, that is not different (usually) is the THC potency limits between recreational and medical use purchases - often a common misconception.
Robert Sciarrone, a Principal with Measure 8 Venture Partners tells Rebellion, “Most US based cannabis operators have aligned their brand strategies and product formulations for both recreational and medical customer segments. Typically, the main difference between the two is the medium in which cannabis is consumed. What’s more discrete? What has a faster onset or offset time? For example, a medical or “wellness” products might include ingestible gummies or tablets, tinctures, and topicals. Adult use products may include traditional jarred flower, pre-rolls, vaporizers, and concentrates.”
Another question many have is pricing, which is determined by two factors: where you live and taxes. While purchasing medicinal cannabis may save you taxes, the cannabis itself is higher in price, so you still end up paying more.
Mr. Sciarrone goes on to add, “What you pay at the register of a dispensary varies dramatically across the U.S. A medical customer in New York for example, a state with strict production regulations and close to 130,000 registered patients, will likely pay upwards of $70 dollars for a half gram oil cartridge. That same product in a mature market like California, where the supply chain is robust and consumers have virtually unlimited options, will only cost customers $30.”
While many insurance companies will cover medicinal cannabis, it is far from an easy feat to secure this funding. It is still an illegal substance (as a Schedule 1 narcotic); hence many large insurance companies are hesitant.
At the moment, many insurance companies will cover commercial cannabis businesses for property and automobile insurance, but in regards to health insurance coverage, many company's policies are far from modern.
For example, a common question posed to potential insurance policyholders is "Do you smoke?", while an individual may not smoke cigarettes (and may not be a tobacco user), they do not know how to answer it.
Assuming they answer yes, their insurance policy rates increase exponentially. Beyond just health and life insurance, auto insurance has added complications due to potential penalties for driving under the influence.
Justin Ort says, “In the U.S. we have only seen small, regional experiments with insurance reimbursement, but in other countries it is already gaining traction and since it offers a potential new avenue for low-cost treatments we expect the development around the science of cannabinoids to be vital to further participation by insurance companies.”
Whatever your opinion may be on the legalization of cannabis, it is hard to deny that it is one of the nation's fastest-growing sectors. Even so, there are unanswered questions about cannabis and insurance, and these insurance companies demand clarity.
At the beginning of the COVID-19 pandemic, there was a run on cannabis by hoarders, and in most markets, sales slowed in March.
As the pandemic ensued, dispensaries were allowed to remain open in many states and were declared essential businesses in the process. Undoubtedly, this is a reputational boost to the industry and an added sense of legitimacy recognized by the government. Could this change the landscape of insurance in the sector? Many experts would say yes.
While COVID-19 has delayed legalization efforts in many states (until most likely after the election), many insurance companies have already put new products into development and are waiting to be released in the market.
Another thing to keep an eye on is that CARES funding was not available to the industry, and with a downturn of the financing available, many of these companies will not survive.
These factors show that the industry is primed for the consolidation of existing firms and that there may be incentives for new firms to enter the space with large revenues projected into the future.
A once unsure fate at the beginning of the pandemic may lead to a future primed for success. Insurance may soon see the answer to their questions, with the legitimacy of the essential business status.
Joe Biden has a track record from being far from pro-cannabis, with his "tough on crime" legislation (the Comprehensive Narcotics Act, the Violent Crime Control and Law Enforcement Act, among others), because of this, it is hard to imagine that reform in the industry would be on the top of his priorities.
However, his campaign has stated that they will seek cannabis decriminalization and expungements for prior convictions. Not to mention, over his campaign, he has stated that he supports legalization, rescheduling the drug, and allowing states to form their own policies. His changed beliefs show the evolution of the American people's views on drug policy. Hence a bright future is looming, maybe not as fast as some may like, but the path is clear.
Written by Jack Argiro
Edited by Calvin Ma & Alexander Fleiss