The Promise & Problems of Marijuana Legalization in Canada

Marijuana Legalization is a hot topic in Canada right now!

Hey, how could it NOT be? We’re only the 2nd country in the world to legalize it for recreational use…

…and NOPE it’s not legal in the Netherlands despite popular belief.

This is why I want to share some of the newest developments with you because I think this is going to change a lot of sectors in Canada. As an insurance agent this is a VERY exciting time.

The History of Marijuana in Canada

…but before I dig into the meat of this article you need to understand the bones of marijuana. There’s a long and sordid history attached to Canada determining that weed was illegal. Did you know drug prohibition in Canada was kicked off by the Opium Act of 1908?

It sure was! Laws are never as straightforward as you are led to believe. They typically have political and monetary roots that have little to do with “protecting” the public at large.

In the early 1900’s the anti-opium movement swept through China, the US, Britain and Japan…

…and Canada didn’t want to get left behind. By 1911 the Opium and Drug Act was passed and you could no longer smoke morphine, opium, and cocaine.

As you can imagine this legislation set the stage for harsher punishment and the inclusion of further substances. By 1923 Cannabis was added to Confidential Restricted List in 1923 under the Narcotics Drug Act Amendment Bill.

Sigh.

…But That’s Not The End Of The Story!

Despite being categorized as a “new” drug – marijuana wasn’t suddenly discovered in the 1920’s. It was used recreationally in the Western Hemisphere in the 1800’s. That being said Canadians weren’t familiar with that use.

Hemp, however, is a different story altogether. As early as 1801 the Lieutenant Governor of Upper Canada was handing out hemp seeds to farmers to spur this industry. By 1822, 300 pounds was allocated for the purchase of machinery to process hemp! Wow – and that’s not all…

…in 1917 a machine similar to the cotton gin was invented to separate hemp fiber from the core. Sadly this product was dropped in favour of cotton and hemp never took off.

It didn’t take long for the recreational use of weed to spread. By the 1960’s marijuana grew in popularity to such an extent that the Canadian government created the Royal Commission of Inquiry into the Non-Medical Use of Drugs aka the Le Dain Commission. This Commission was tasked with investigating non-medical uses of cannabis.

A report was generated in 1972 recommending criminal penalties be removed for possession. Sadly the findings weren’t heeded.

Over the past decades, marijuana use has continued to grow and it’s estimated that by 2021 3.8 million people in Canda will be using weed recreationally.

Marijuana Legalization is Changing EVERYTHING!

As you can imagine there’s a lot of debate surrounding whether or not marijuana legalization is a good thing.

First of all, there are some health risks. Yeah, I hear ya’ most people don’t have any issues with smoking pot, but as with anything else it doesn’t agree with everyone.

“Vanessa Markov, 33, of Toronto knows about that risk firsthand. She started smoking marijuana at age 15. At first, it was a couple of times a week during or after school with peers. By the time she graduated from high school, she was lighting up every day. “I lived a relatively functional life: I had good jobs, and I did well,” Markov said. “But the secret life I had was when I went home, I would just smoke pot the entire time.”

She said she now realizes that heavy use took a toll on her health.” Legalization Comes with Risks: Doctors Reminding Public that Health Effects of Cannabis Are Real, CBC News

Another point of concern is that people will toke and drive. Let’s face it none of us want someone under the influence behind the wheel. There’s serious worry that it will be difficult to detect and there are no guidelines governing how much is too much.

Tme will tell how this will unfold.

Canada Poised be a Leading Manufacturer of Cannabis

On the positive side, marijuana legalization frees our scientists to lead the charge when it comes to research and development.

I’m very excited to see where all of this goes. There have been many claims regarding the use of marijuana to fight cancer and other maladies. It looks like researchers will finally have the opportunity to explore these claims!

In fact, Ascent industries just announced they are collaborating with Simon Fraser University:

“The intent of this project was to develop a better understanding of the production methods for cannabis that would lead to better quality product for consumers,” says Dr. Punja. “This university-industry partnership also includes training of graduate students to take a leadership role in Canada’s booming cannabis industry.” The project is set to enter its third-year next month.” Ascent Industries provides an update on cannabis research initiatives with Simon Fraser University, Cision

Marijuana Legalization New Businesses, New Opportunities

Well it sure looks like the marijuana business is booming! It’s providing opportunities for entrepreneurs, investors, and governments.

Cannabis stocks are rising after 3 US states follow Canada’s lead and legalize the recreational use of weed. It also didn’t hurt that Jeff Sessions resigned. It looks like change is just around the corner for all of North America.

From a business perspective appears that the US has the most to gain business-wise. Sure, Canadian companies have room to grow so don’t count them out but the sheer size of the US market puts them in the driver’s seat.

.” ..some of the lesser U.S. companies have the most to gain. “The U.S. players will soon have as much market capitalization as the Canadian companies or more,” he said. “These are Barbarians at the cannabis gate in my view,” adding that he thinks it’s more likely in the long run that U.S. cannabis names will one day try to take over the big Canadian players than the opposite happening. Cannabis stocks rise as 3 U.S. states vote to legalize pot and Jeff Sessions resigns, CBC

What Does Marijuana Legalization Mean For Life Insurance?

Prior to 2016 insurers tossed people who use marijuana in the same category as smokers. Thankfully this recently changed, but the best rate you can expect is standard.

Still not an amazing result.

The reason for this is the life insurance business is all about profit and there simply wasn’t enough data to properly assess marijuana use.

With legalization, this will absolutely change.

Canadian life insurance companies are scrambling to nail down their underwriting approach to make inroads into this new and very lucrative market. As I write this article insurers are booking webinars to educate agents about their new underwriting guidelines.

My guess is life insurance companies will follow the American lead. Companies such as Lincoln National Life Insurance offer policyholders preferred plus if they qualify and smoke marijuana less than once per month.

There Is One Caveat – You Can’t Use Tobacco

Do NOT mix marijuana with tobacco products or you’ll be right where you started at smoking rates.

What Does the Marijuana Legalization Mean for Health Insurance?

If you’re looking for health insurance and you smoke pot, I have some good news for you! Some insurers are already offering coverage through their group plans! Check it out!

  • SSQ Insurance: Now offers group plan members coverage of medical marijuana expenses as early as January of 2019.
  • Manulife: Provides a medical marijuana program.
  • Desjardin: Provides coverage medical cannabis use.
  • Sun Life: Offers coverage for medical cannabis use.

What About Insurance For Businesses That Provide Cannabis Products?

Well, there’s good news for them too!

Hub International is launching cannabis insurance risk services in Canada. They will be offering specialized coverage for producers, distributors, and retailers.

…and Lloyds of London will also be underwriting Canadian cannabis businesses.

What Does Marijuana Legalization Mean for Auto Insurance?

As I mentioned about there is some concern about how marijuana will affect driving laws in Canada. Chances are it’s going to impact us all, not just the people who smoke weed.

The thing is accident rates increased in areas where marijuana is legal in the US. Yep. Underwriters rely on numbers like these to develop their guidelines. Auto insurance premiums in Colorado went up by 50%. Ouch. Unfortunately, we don’t have any official guidelines yet – but I assure you they ARE coming.

…and if you are considering toking and driving. Don’t do it. Insurance companies are smart. They include language that prevents you from collecting a claim that results from “intoxicating substances.” Marijuana definitely falls into this category.

What Does Marijuana Legalization Mean for Home & Building Insurance?

There’s still a stigma attached to the production, use, and sale of marijuana. Even the medical cannabis industry has seen escalating premiums for legal producers.

If you grow your own marijuana, expect to see a hike in your rates. Insurers feel that you’re more susceptible to structural damage due to the modified environment people assume you need to cultivate this plant. This belief is connected to illegal grow ops that misused electricity and damaged property. This doesn’t accurately reflect small-scale cultivation. Hopefully, as marijuana becomes more common place these erroneous assumptions will change. But for now, you can expect higher premiums.

So What Are My Final Thoughts Regarding Marijuana Legalization?

Marijuana production, use, and sale is at a crossroad. We can expect HUGE changes in business, research & development, investment, use, and insurance coverage. It’s a mixed bag – some good and some not so good.

Areas I Expect To See Positive Momentum:

  • Research & Development
  • Investor Opportunities
  • An Increase in Business Opportunities
  • The Potential for Cheaper Life Insurance Premiums for Pot Smokers
  • The Potential for Cheaper Health Insurance Premiums for Pot Smokers
  • Less Stigma Attached to Marijuana
  • More Production of Hemp Products

Areas That Could Prove To Be Problematic:

  • Increased Auto Insurance Premiums & Increased Accidents
  • Escalating Home & Building Insurance for Those Who Grow Pot
  • Government Overregulation
  • Societal Issues Caused by Availability

At Policy Architects we intend to keep our finger on the pulse of this very exciting industry. It’s my hope that as marijuana use is normalized we’ll see a reduction in insurance premiums across the board and some pretty innovative used for this incredible plant.

Melissa Thompson writes about a wide range of topics, revealing interesting things we didn't know before. She is a freelance USA Today producer, and a Technorati contributor.