America's new marijuana-based risk insurance problems

It was reported recently that the chief executive of Terra Tech, a publicly traded medical cannabis company, was declined personal life insurance due to his association with the marijuana industry. Mutual of Omaha said it is 'company policy'. 

The legalisation of marijuana has caused issues with insurance cover in both general and risk industries. We have all been told since the dawn of modern time that cannabis is risky, dangerous, and only associated with criminals, but most of us know that just isn't true.

Research has shown cannabis to be extremely useful in treating or managing many serious health conditions, which makes it an investment in our future, not something to be afraid of. But, this hasn't stopped finance companies like insurers discriminating against anyone involved, however remotely, with cannabis in a culture torn between the 'war on drugs' and science. 

The letter to Peterson read: 

"We have discontinued the processing of your application for insurance due to company policy. We cannot accept premium from individuals or entities who are associated with the marijuana industry."  

Terra Tech is a cannabis-focused agriculture company providing high-quality medical cannabis and other agricultural products. 

Legalisation of marijuana in some US states has been causing issues across the board - the cannabis companies themselves are sometimes having a hard time getting bank accounts and paying taxes, and worse, personal use has become an icky sore spot - employees can be fired for using the now completely legal recreational marijuana in some areas, and landlords aren't sure how to manage weed-chuffing tenants. There are stories about people having a hard time getting mortgages too. In fact, even at Terra Tech, health insurance for employees has so far been an impossibility - no insurer in California will take them as a client, which seems bizarre at best considering that marijuana is legal in California. 

The federal government still maintains that cannabis is a dangerous drug. Most US states have marijuana listed as an illegal drug, with criminal penalties for possession, sales, and cultivation. 

There appears to be some confusion and internal conflict regarding the recently outlawed plant and how Americans feel about its new status. The people making the decisions at US insurance companies are just making it up as they go along in terms of company policy - they can deny an application, add an exception, increase the premium, or just do nothing with knowledge of marijuana association or use in applicants. It is completely at their discretion. 

Read our extensive article on marijuana and underwriting