Canada goes to pot

Canada goes to pot
Canada goes to pot

Cannabis legalisation raises questions for Canada’s insurers.

Who would have thought it? As recently as the 1950s, free-wheeling citizens of Montreal – where tourists went to have fun – sneered at ‘stodgy’ Torontonians for ‘closing down beer sales’ on Sundays, requiring pass books to buy liquor, and housing ‘beer parlours’ in hotels. ‘Sin’ was a commodity to be parcelled out cautiously, within regulated hours and in strictly limited quantities (beer glasses had to be of regulation size – small), no drinking straight from the bottle, no standing while drinking, no music, men-only. Flash forward to 2018,  and the Toronto Star is explaining how Queen’s Park, the Ontario provincial government location in Toronto, is gearing up to be the largest legal pot dealer in Canada (‘and maybe the world’): “Unlike most jurisdictions where marijuana is legal – such as California and Colorado, where private-sector outlets are allowed to sell cannabis – Canada’s most powerful provincial government will enjoy total control over retail sales. In fact, the Ontario Cannabis Retail Corporation, a subsidiary of the LCBO (Liquor Control Board of Ontario), will operate 40 stand-alone marijuana shops as of next summer, rising to 150 outlets by 2020.” To round out the story: what is happening in Ontario is happening in all of Canada’s provinces and territories. From Newfoundland to British Columbia, marijuana grown in government-regulated facilities and farms will be available over the counter, to anyone over the age of 18 (provinces can set a higher limit), in limited quantities (no more than 30 grams carried at any one time), and every bit of it legal and generating tax revenue that government ministries are eager to get their hands on.

Political pondering

Since 2001, marijuana in various forms – tablets, oils, gummies – has been available under the Access to Cannabis for Medical Purposes Regulations for patients possessing government-issued permits. But it was the announcement by Canada’s Prime Minister Justin Trudeau in 2017 that Parliament would legalise marijuana use for recreational purposes by 1 July 2018 that boosted the surge of marijuana-related commerce (over 100 public companies are listed on Canadian, American and even European stock exchanges).  Marijuana Business Daily, an industry publication, estimates that annual sales of recreational marijuana products could yield up to US$15 billion in Canada and the US by 2021, with Canada producing most of the products and generating most of the sales. Of course Parliament, controlled by the Liberals, still has the task of getting the final Cannabis Act (Bill C-45) passed and enacted, and the Senate – mostly controlled by Conservatives – has asked for a slowdown for more study on the potential social impact of outright legalisation. But with beer companies, government liquor store outlets, pharmacies and even large supermarket chains all salivating at the thought of new revenue streams coming in from not only a booming domestic market, but the US and Europe as well, it would take a courageous – or foolhardy –  political opposition to scupper the works. So when Trudeau said recently that 1 July this year was not set in stone as an ‘open for business’ date, but that it might take to the end of summer to help the Senate find its feet, the effect was no more serious than a one-day slide of marijuana stocks on the Toronto and US exchanges – followed by the continuation of an impressive rally.

Canada? A nation of pot heads? Really?

Yes, Canada is among the top legal cannabis-producing countries in the world, and among the top consuming countries as well: a UN study has shown that of 29 different countries studied, Canada was number one in terms of underage access to marijuana. The Centre for Addiction and Mental Health claims that more than 40 per cent of Canadians have used cannabis in their lifetime and about 10 per cent have used it in the past year. Perhaps that’s why there appears to be a national equanimity about the prospect of Canada becoming the world’s leader in cannabis commerce. Nevertheless, though Canadians old and young love their pot, the Cannabis Act is designed to maintain the law and order and tidiness that Canadians are noted for internationally. Says Trudeau: “Young people have easier access to cannabis now, in Canada, than they do in just about any other country in the world … and whatever you might think or studies seen about cannabis being less harmful than alcohol or even cigarettes, the fact is it is bad for the developing brain and we need to make sure that it’s harder for underage Canadians to access marijuana. And that will happen under a controlled and regulated regime.” Accordingly, federal government will license and regulate growers and the provinces will be responsible for controlling how the drug or its components will be sold – where, when, to whom and at what age (no younger than 18). They will also quantify how much can be bought at any one time, how much can be carried on one’s person, how drivers or users of heavy or intricate machinery may be tested, and how those limits may be quantified – so far as is technologically possible. Local police forces and the vaunted Royal Canadian Mounted Police are currently testing screening devices that can detect THC (tetrahydrocannabinol – the active ingredient in marijuana, just as alcohol is the active ingredient in beer, wine or liquor) in one’s saliva or breath, and developing techniques to differentiate users impaired by pot from those affected by booze, although they admit that the testing technologies still have a way to go before they become universally available. Proposed levels under tightened driving impairment laws that are also being advanced by the Liberals would brand two to five nanogrammes of THC per 100 millilitres within two hours of driving punishable by a fine, over five nanogrammes subject to either indictment or summary criminal offence, and combined THC and alcohol (50 milligrammes per millilitre of alcohol and 2.5 nanogrammes of marijuana) open to a major fine and possible jail time if for multiple offences. 

Insurer challenges

To date, Canadian insurance companies have shown increasing concerns about legal issues –some quite bizarre – that may be exacerbated with legalised marijuana use and production. A 2017 article in Canadian Underwriter reported one case in which the Ontario Court of Appeal upheld a mutual insurance company’s decision to dismiss an insured’s property loss claim under a homeowners policy because the insured’s home was totally destroyed by an explosion generated by a tenant’s illegal production of marijuana. The court couldn’t exactly pin the cause on the tenant’s use of equipment used in growing his plants, but it did find that ‘an exclusion for indirect or direct loss or damage to dwelling used in processing or manufacturing of marijuana’ applied. A lawyer commenting on the case noted that ‘given that persons will be able to grow four of their own plants in their residences … this exclusion will have to be modified in some fashion’. It certainly might, given the gadgetry being marketed to do-it-yourself ‘growers’ trying to re-electrify their houses or apartments for hydroponic-assisted growth of weeds one metre in height. This refers to the Cannabis Act, which allows for limited cultivation of marijuana for personal or medicinal use in one’s home (up to four plants, none higher than one metre). Some carry this allowance to exotic stages with high intensity lights, soil testers, fertilisers and other ‘agricultural’ aids.  It’s notable that one of the strongest stock market performers in the cannabis sector is Scott’s Miracle-Gro, the international soil fertiliser company.

Travel insurers – pay attention!

The introduction to this article, published in ITIJ last month, reported that two Canadian health insurers had already taken steps to underwrite marijuana users differently (specifically more leniently) than tobacco smokers. And several provincial human rights panels and courts have ruled, in individual cases, that health insurers must provide coverage of medical marijuana for patients with issues of pain or disability impairing their work performance. To date, travel insurers in Canada have taken a muted approach to underwriting rules for alcohol, tobacco or other intoxicant use. Their policy language remains imprecise, vague and not always practicable. An exclusion from Manulife Canada’s CoverMe travel insurance policy, for example, states that it will not pay for ‘any loss, injury or death related to intoxication, the misuse, abuse, overdose of or chemical dependence on medication, drugs, alcohol or other intoxicant’. Another exclusion from TUGO policies will not pay for ‘consumption or abuse of any alcohol, drugs or medication, or any event, act or omission caused by or contributed to by the use or abuse of alcohol, drugs or medication’. But how does one define ‘intoxicated’ or ‘misuse’ or ‘abuse’ as differentiated from casual social use in the absence of a witness? Amount consumed as detected by blood alcohol content (BAC) is not always a good measure – a couple of beers can be innocuous for an experienced drinker, but lethal for an inexperienced one. And emergency room staffs don’t always test for BAC, and when they do it may be several hours after the medical event occurred, which pretty well invalidates the test. Even addictions epidemiologists can’t establish at what level of use ‘impairment’ will occur, or when casual ‘use’ morphs into ‘abuse’ over extended populations. One size does not fit all. Given such inexactitude in measuring alcohol consumption, what happens when you put marijuana into the mix (for which current breathalyser technology doesn’t work), and a hospital claim for $100,000 to treat a subdural hematoma in a marijuana user who fell off a motorcycle needs to be adjudicated?

Crossing borders

Another area of potential concern for travel insurers is the element of travel itself. Every year, Canadians make close to 25 million leisure trips (of at least one night’s duration) to the US, where there are currently 30 states where marijuana is at some stage of decriminalisation or legalisation. But the US border is federal property and the feds have made it clear that, in their book, marijuana is an illegal controlled substance, and a Customs and Border Protection officer is perfectly within his or her rights to stop anyone dead in their tracks and send them home if they say ‘yes’ when asked if they have ever used marijuana – even if the hapless visitor has an official Canadian medical permit allowing him to use a marijuana product such as oil, tablet, gummie or cannabinoid-infused beverage. Not only hapless, but downright reckless, as the Cannabis Act prohibits taking marijuana out of the country – an offence punishable by up to 14 years in jail. But then Canadians aren’t searched or otherwise ‘checked out’ when leaving the country, so who’s to know? And if a Canadian visitor on spring break in the US is apprehended after a car accident or bar fight with a 30-milligramme stash of dried marijuana in his pocket (perfectly legal in Saskatchewan, but not in South Texas), there could be a problem.  Similarly, what is the risk to an insured client who admits medicinal marijuana use for a back injury or persistent headaches or seizures during an emergency hospital admission in, say, South Carolina, or 20 other such states where cannabis use of any kind is illegal? 

What’s a doctor to do?

US federal law requires that even a drug user be treated for any emergency, but it also clearly prohibits the use of marijuana, which it classifies as a Schedule 1 Controlled Substance (same as heroin) and prohibits it for medical use, even in hospitals. What is the hospital staff’s responsibility when dealing with that patient? Do they report to local authorities? Do they gloss over their findings? What do they note in the hospital record? And how does that impact the adjudication of a claim? Some hospital staffs and doctors, even those in states that have legalised marijuana use, or at least decriminalised it, are struggling to develop policies to accommodate patients who use the drug for pain relief, treatment of headaches, seizures or the growing panoply of other symptoms for which it is said to be beneficial. But many remain in a bind when it comes to dealing with such patients, with no consistency of policies or much professional guidance.  Due to its classification in the US, doctors are not allowed to prescribe it. In Canada, the substance is classified as Schedule 11, meaning the federal government considers it to have a higher than average potential for abuse or addiction, but allows its use for  people suffering pain or other debilitating illnesses. But even in Canada, doctors can’t ‘prescribe’ it, as it doesn’t have a DIN (drug identification number). However, they can help their patient access it – legally.

A thorny issue for underwriters?

With so many travel insurance policies requiring some degree of medical underwriting, will insurers have to elevate the recognition of cannabis products as health factors in their underwriting, eligibility criteria and medical questionnaires? And will applicants be prepared to admit to marijuana use, knowing that information could land them in legal limbo in other countries, or potentially open them up to non-disclosure penalties if they deny such use to their insurers, who may later deny their claim? Legalisation of marijuana is already here in one form or another, and even if the Canadian Senate should delay or overturn this current effort – highly unlikely, as the vast majority of citizens favour the move – it would quickly be resurrected. The greening of marijuana appears to have come. Incredible it should have been in the Great White North. ■