Contrary to stoner stereotypes, cannabis users are very interested in grown-up things like obtaining quality medical coverage, pursuing life insurance protections after they start families, or seeking “key man” coverage for their businesses.
That’s not always easy — or even possible, as evidenced by the recent experience of TerraTech CEO Derek Peterson. Peterson had applied for life insurance through Mutual of Omaha, but in June the company rejected his application, writing back that it could not accept premiums “from individuals or entities who are associated with the marijuana industry.” The company didn’t elaborate, and Peterson found himself, he quipped, “trying not to get hit by a car.”
The flap drew a lot of attention, and it made one thing evident: The insurance industry and cannabis community have some reconciling to do.
Now, Peterson was denied for his involvement in the industry, not anything to do with his personal use of cannabis. This raises an interesting question: If you’re a regular cannabis user, are insurance companies allowed to discriminate against you when you apply for insurance? Yes and no.
Let’s start with the good news — the no. Health insurance companies, thanks to the Affordable Care Act (ACA), are prevented from denying coverage based on any preexisting condition. To this end, the ACA prevents them from actually asking for any information from applicants beyond the basics. And cannabis use, it seems, isn’t one of those basics just yet.
“Under the Affordable Care Act,” writes Jackson Holtz, a spokesperson for Seattle-area coverage provider Group Health Cooperative, “insurance companies including Group Health are allowed to ask for only certain information from qualified applicants including age, address and whether or not they use tobacco products.”
Your rates can, of course, go up for regular tobacco use, but that apparently doesn’t include other things Americans may be smoking. In a strange sense, the federal government’s inability to acknowledge the legitimate use of cannabis by its citizens works in your favor here. I mean, there’s still the possibility of being arrested and jailed for it, but hey, at least you won’t have to pay an arm and a leg for your premiums!
That loophole closes when it comes to life insurance, however. Life insurance companies are permitted to ask a much wider range of questions about an applicant’s overall health and behavior. Indeed, 80 percent of the 148 underwriters surveyed at an Association of Home Office Underwriters conference in 2015 said that cannabis factors into their decisions on coverage, according to a Kaiser Health News report.
However, some more good news: That doesn’t always mean denial. While cannabis was long classified as a dangerous illegal drug, and its use was grounds for denial of coverage, attitudes have shifted and it’s more and more possible to find a company that works with cannabis consumers. MetLife, for example, does not deny applicants outright based on cannabis use. They’re far more concerned with frequency of use than whether or not an applicant partakes.
“If you don’t use cannabis every day, you’re not rated as a smoker,” said Megan Lantier, a spokesperson for the company. “It’s not really a policy, it’s just that you’re not considered a tobacco smoker. That’s the major thing that gets you [higher rates].”
In plainer terms, the company won’t deny you for smoking pot, even if you do consume more than once a week; being a Saturday smoker simply gets you a better rate. Judging from this report by Munich RE, a major international reinsurance company, that’s the direction the insurance industry in general seems to be leaning.
The insurance industry, though, is still leery of cannabis in a lot of ways. As the Munich RE report notes, “If abuse or multiple hazards associated with marijuana use are identified, the risk will likely be unacceptable.” However, as Lantier alluded to, the chief worry for insurance-seeking cannabis users these days isn’t complete denial, it’s smoker’s rates.
Jeff Zucker, CEO of Colorado cannabis consulting firm Green Lion Partners, said that his cannabis use definitely emerged as an issue during his quest for life insurance. A couple years back, before he was involved in the industry, he was working with a broker at Wells Fargo to consolidate some existing policies into a single better one when he got some bad news.
“They started asking me questions about my visits to a specific doctor,” he said. “I knew that it was a doctor I’d been sent to for cannabis — I thought confidentially.
“Within a week or two they told me I was being denied. They listed the reason for denial as ‘a twentysomething lifestyle.’”
Right, because medical cannabis users are totally partying 24/7, not battling cancer or wasting syndrome or PTSD or you name it. Also, Zucker is 28, so it’s kind of hard for him not to live a “twentysomething lifestyle.”
He was eventually offered a much higher smokers rate, but he balked at the cost and chose to stick with his previous situation.
“I’ve never smoked a cigarette in my life,” he complained. “I was very upset, actually. I didn’t do anything about it then, but had this happened to me in the past year and a half, I would have pushed harder against it.” Especially vexing to him was the fact that he rarely even smokes cannabis, preferring to vaporize it.
Kyle Sherman, the CEO of cannabis inventory tracking software firm Flowhub, was able to find insurance, but he reported similar stigmatization of his cannabis use.
“This is going to be tough,” he remembered thinking. “A lot of places are going to deny me based on my cannabis use. But it’s not something I’m going to hide. I’m going to very willingly tell everyone that I use it.” The key, he said, was to shop around and find companies like MetLife that were more comfortable with cannabis.
“I searched for companies that support cannabis use, and what I found out was that there are actually a few out there,” he said. Unlike Zucker, however, Sherman went into the search already expecting to pay higher rates. What would have been a $20 per month policy, he said, went up to $150 per month based on his disclosure of cannabis use.
“It’s an extremely expensive premium to have, but for me it’s worth it,” he said. “It was important to me to disclose the use. As an advocate for legalization I want to make sure that everyone I work with knows I use it daily, because if I can live a normal life we can show them that.” However, he was still vexed at being lumped in with cigarette smokers, as he’s more of an edibles person.
“I have a higher premium because I’m eating food that’s infused,” he said. “It’s a joke.” His agent agreed with him, he said, but couldn’t do much to help him, as the company’s pot policy wasn’t quite there.
“They have to classify it as tobacco use, because there’s no other classification for it yet,” Sherman said.
Indeed, Lantier at MetLife didn’t know whether the insurer distinguishes between edible or vaporized forms of cannabis and consumption via combustion. She said she’d ask around within the company but didn’t reply by press time. The Munich RE report, coming from one of the world’s largest reinsurers, might be the best indication of where insurance companies are with cannabis — and it certainly makes no distinction between brownies and blunts.
Regardless of how you consume cannabis, if you’re applying for life insurance, the main thing is to disclose. For one, lying on your application is one of the only things that can void an already-issued life insurance policy. For two, as Sherman stressed, even if you have to pay more, you’re doing your part to fight cannabis stereotypes.
“We’ve all gotta be vocal about our use,” he said. “Be loud and proud. We’re professional stoners.”
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