legalized marijuana | hb emerging complex claims
TRANSCRIPT
Legalized Marijuana What A Long, Strange Trip It’s Been Emerging and Complex Insurance Claims Forum 2016 February 25-26, 2016 Los Angeles, CA
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Meet the Speakers – Stephen Henning, Partner, Wood, Smith, Henning
& Berman LLP – Julia Manganaro, Sr. Claims Specialist, Navigators – Linda Pierce, Vice President, Western Region
Claims and Loss Control, Gallagher – Dean Rocco, Partner, Wilson Elser Moskowitz
Edelman & Dicker LLP
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ü Why this is the hottest emerging risk nationally? ü How did this trend start? ü What areas of the law are impacted? ü How claims and case law will change in coming years?
Issues To Discuss Today
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• Legalized Marijuana Issues Directly Impact: ü Professional Liability ü Transportation ü Employment ü Premises ü Hospitality ü Landlord-Tenant ü Life and Health ü And More…
• Marijuana Insurance Industry – “How High Can it Go?” – Currently markets are more comfortable with medical marijuana – Insurance industry standards being created – Some insurers offering claims made coverage for recreational facilities and occurrence policies for medicinal facilities
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GROWING USAGE & ACCEPTANCE – U.S. is largest per capita marijuana consumer (WHO), and use is on
the upswing. 18.9 million current (past-month) users – Marijuana arrests still comprise almost ½ of all drug arrests reported
in the U.S. – Public opinion is changing • 58% of Americans think cannabis should be legal, the first majority to
express that sentiment • Up from only 12% in 1969
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EXPANDING CANNABIS DELIVERY METHODS – Smoking – Vaporizing – Oral ingestion – Transdermal patch – Intravenous injection – Sublingual absorption
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• Hundreds of thousands of dollars in Edible sales, one month in Washington • Effects begin more slowly than smoking, and tend to last longer
• Confusion about recommended dose • Edibles linked to at least two deaths and an increase in ER visits
Cannabis-Infused Edibles
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New Genre of Lawsuits Created – Hershey Chocolate litigation – Class action on edibles – Co. pot grower sued over pesticide use
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Packaging and Warnings
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The Economics of Cannabis
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• Legal U.S. pot sales were $5.4 billion in 2015. Increase of 17.4% from $4.6 billion in 2014. (ArcView)
• IRS does not allow businesses to deduct cost of cannabis as it would for other goods sold.
• Competition remains, as there is an illicit market with which to compete.
Where is Big Pharma in the Green Rush?
• Controlled Substances Act • Patent issues • Competition with existing drugs • Partnership for a
Drug-Free America
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• Perceived lower risk of cannabis use in the U.S. has led to increase in use
• What is the current evidence of risk? – Data is conflicPng
• Remains off-‐limits under age 21 • Health concerns for youth
What Are The Risks of Usage?
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• Controlled Substances Act of 1970 – Schedule I Drug = “High potential for abuse and no acceptable medical use”
• U.S. Supreme Court Decisions – U.S. v. Oakland Cannabis Buyers Cooperative (2001) and Gonzales v. Raich (2005) (Federal
government has right to regulate and criminalize cannabis) • DOJ’s “Ogden Memo” (2009), “Cole Memo” (2011), “Cole II Memo” (August 28, 2013) • New Attorney General • 45th President
Federal Law – A Move To Schedule II?
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State Law – Puff, Puff, Pass Legislation
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Professional Liability: Lawyers • Rules of Professional Conduct
– Prohibit lawyer from counseling client to engage in crime or assisting client engaged in crime
– Colorado and Washington Supreme Courts allow lawyer to assist clients if conduct lawful under state law
• How does a Carrier Underwrite LPL Risks? – Evaluate on individual basis? – Is lawyer properly vetting his/her clients?
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• AICPA has recommended that CPA’s ask themselves a series of questions: – What is the position of my state Board of Accountancy? – What are the legal risks of providing these services in my state? – Is there a risk of prosecution to a business that provides services to marijuana-
related businesses? – What is the likelihood that the DEA or DOJ would prosecute this business? – How are CPAs in my state offering services to state-recognized marijuana
businesses? – How will the services affect my professional liability insurance? – What is the likelihood that I may be disciplined or lose my license?
Professional Liability: Accountants
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Professional Liability Health Professionals
• Individual Reactions to MMJ • Quality Control / Proper Dosage Control • No testing required for medical marijuana
in many states – e.g., Colorado now requires testing for
recreational edibles and licensed cultivation centers but not MMJ caregivers
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• Asking About Marijuana ConvicPons During ApplicaPon Process
• Drug TesPng
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Employment Law Issues
• DiscriminaPon Claims • Responding To Use During Employment
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Employment Law Issues
• Reasonable AccommodaPons and Medical Leave Rights
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Employment Law Issues
• Reimbursements for Medical Marijuana by Injured Workers
• Denying Claims Based On Impairment During Accident
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Employment Law Issues
Indemnity and Additional Insured Issues
• Is an indemnity agreement with a business engaged in the marijuana industry legally enforceable in a state that has not yet legalized marijuana?
• Are there problems caused by naming out-of-state production and supply chain partners as additional insureds?
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Questions?
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Thank You
Stephen Henning Founding / Senior Partner Wood, Smith, Henning & Berman LLP [email protected]
Linda Pierce Area Senior Vice President Arthur J. Gallagher [email protected]
Dean Rocco Attorney Wilson Elser Moskowitz Edelman & Dicker LLP [email protected]
Julia Manganaro Senior Claims Specialist Navigators Insurance Company [email protected]
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