Some Insurers Feeling Not So Hot on Medical Marijuana Dispensaries


By Phil Yacuboski

Honolulu, HI ( - Even though marijuana is considered illegal by the federal government, many states are making it legal. It’s becoming a muddy issue, especially in workers’ compensation. Just last week, the largest workers’ compensation insurer in Hawaii canceled policies for seven medical marijuana dispensaries because of conflicting federal and state laws. 

“HEMIC has received two outside legal opinions regarding its role in providing workers’ compensation coverage to Hawaii’s medical marijuana dispensaries,” said Marty Welch, chief executive officer of the Hawaii Employees Mutual Insurance Company in a statement to

Citing “legal opinions,” saying that the company and its board of directors could be held criminally liable, HEMIC voted unanimously to stop the policies and fully refund all premium payments currently insured by HEMIC.

Welch blamed “state and federal vagaries” surrounding the dispensary business. 

In 2000, Hawaii legalized medical marijuana. Licenses were awarded last year. Hawaii’s state law allows the HEMIC to decline to insure businesses to that may be engaged in illegal activity. 

Many experts argue that because state legislation is different than federal law, there is confusion when it comes to workers’ compensation.

In Arizona, workers’ compensation insurers are not required to pay for medical marijuana by law. A federal court in Michigan affirmed a lower court’s decision that found an employer had the right to fire an employee who tested positive for having marijuana in his system, even though he had a medical registry card and it was after a workers’ comp injury. 

“We are really in unchartered waters,” said David Taylor, president of the Pennsylvania Manufacturers’ Association. “You think about what happens on the manufacturing floor. You have heavy equipment, extreme temperatures and chemical reactions. Safety is paramount. The exposure to employers from liability from employees who are impaired in the workplace is very, very concerning to us. I don’t know how it’s going to work out.”

Taylor said he thinks it would be “reasonable” for an employer to say that if you have medical marijuana in your system, then they can’t have you on the jobsite, but the law is unclear. 

“In many cases, the employer is put in an impossible position,” said Taylor, adding that it could drive the cost of insurance higher. 

“I think until it’s approved federally, it’s a gray area,” said Patricia Ostrowski, senior vice president of Integro, an insurance brokerage and employee benefits consulting firm.  “There are still so many cases where legislation is going back and forth.”

Ostrowski cited the New Jersey case of Andrew Watson, who had his medical marijuana paid for by his employers’ workers’ compensation after an administrative law judge ruled in his favor.  He bought the medical marijuana, which is legal in the Garden State, and then his employer refused to pay the bill. There was a similar decision in New Mexico. 

What concerns Ostrowski is that there is currently no immediate test for marijuana to determine how impaired someone might be.

“They can’t measure it,” she said.  “It’s not like alcohol where there is an immediate test.”

Twenty-eight states and Washington, D.C. have similar medical marijuana laws already on the books.

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