Risk appetite for marijuana ‘all over the map’

Some insurance companies “want no part” of covering risks related to cannabis in Canada, an industry analyst warns.

As of Oct. 17, it will be legal in Canada for adults to possess up to 30 grams of dried cannabis for recreational use. Currently cannabis is legal only for medical use.

“There will always be issues of where it can and where it can’t be used once it becomes legal,” Raymond Thomson, associate director of A.M. Best Company Inc., said during the ratings firm’s recent insurance market briefing Canada, citing an example of a college campus that will not allow marijuana use in a student residence.

“We have talked to companies in our rating meetings regarding cannabis specifically and the appetite is all over the spectrum,” Thomson said at the briefing, held Sept. 5 at the Sheraton Centre in Toronto. “Some want no part of” cannabis risk; other carriers “see some opportunities” if they can price it properly and mitigate risks, suggested Thomson.

Cannabis vendors need product liability coverage but there is a “limited number” of insurers offering such coverage, Wendy Sinclair, managing director of Jones Brown Inc., told Canadian Underwriter earlier.

The “entire cannabis supply chain” needs to have insurance coverage – such as product recall and contingent business interruption, Sinclair added at the time.

In Ontario, the government aims to have a “private retail model” for recreational cannabis in place by April, 2019 but few details have been released.

Anyone who serves alcohol can be held liable for damages or injuries if that alcohol is deemed to have been a contributing factor an incident, the Insurance Bureau of Canada notes. This liability risk is probably not going to change with the legalization of recreational marijuana, said Mouna Hanna,  a Toronto-based insurance defence lawyer with Dolden Wallace Folick LLP, during the recent Canadian Claims Summit, hosted by the Canadian Independent Adjusters’ Association in Toronto.

“I suspect at most they will require servers and bartenders to undergo more training or to redo their smart serve but I don’t think the standard of care is going to change,” Hanna said.

Right now it is too early to say much about the liability risk faced by a cannabis retailer in Ontario, Ari Krajden, partner with co-chair of the coverage practice group at law firm Zarek Taylor Grossman Hanrahan LLP, told Canadian Underwriter earlier.

“Unlike alcohol, there is no current consensus on safe limits for consuming cannabis,” the Human Resources Professionals Organization said in a report titled Clearing the Haze: The Impacts of Marijuana in the Workplace.

The “significant risks” associated with marijuana use include “mental illness, impaired driving, dependence, lower grades at school, cognitive decline and lung disease,” the Canadian Medical Association notes. “Legalizing it won’t change that.”