As Canadians countdown to the start of cannabis edibles sales in December, some sobering information is filtering in to the effect that life insurance premiums could go up depending on one’s cannabis edibles consumption habits.
When recreational marijuana was legalized in October 2018, most insurance companies stopped regarding marijuana users as smokers. People who are categorized as smokers can pay up to four times more in life insurance premiums when compared to those who are categorized as non-smokers. This is because smokers are seen as being higher-risk clients for insurance companies.
However, it has emerged that one’s marijuana consumption habits can still get that person in the smokers’ category when taking out a life insurance policy.
Different insurance companies have their own cannabis consumption threshold beyond which the individual is classified as a smoker. Many put the weekly consumption cap at 2-4 times, but some have a higher consumption threshold.
So, what’s the deal with cannabis edibles and life insurance premiums?
It is anticipated that marijuana edibles will appeal to a broader section of the Canadian community, including those who are queasy about smoking cannabis flower. Additionally, it will be easier for someone to consume an edible product, such as a brownie, containing cannabis since these products will become readily available.
For example, many will not find any problem consuming at least one cannabis edible each day, and it is rational to expect lots of Canadians to consume more than one pot edible a day. This puts their weekly average consumption at more than the threshold set by insurers, and the smoker classification can get activated for such people.
Since marijuana has only been recently legalized, insurance policies are still in their infancy and the fine print hasn’t yet been adjusted to cater for the actual quantity of marijuana consumed. For example, a small brownie containing a small amount of marijuana is currently rated the same as a jumbo one having much more marijuana than what is contained in the smaller brownie.
This seems unfair to marijuana users, but it is what it is until the policies are modified to accommodate those nuances.
Some people may be wondering how life insurance companies will get data on their clients or prospective clients’ cannabis consumption habits. While these insurers will not access your cannabis products purchase records, they will ask you to provide some information about your marijuana consumption habits as you take out a policy.
If you downplay how much marijuana you consume in order to avoid being classified as a smoker, you face a high risk of any insurance claim you or your loved ones make being denied if the insurer later discovers, from your medical records for example, that you consume way more marijuana than what you declared. A discussion with your attorney is advisable before you sign any life insurance paperwork.
These developments in Canada paint a picture of what could happen in the U.S. if the federal government ever amends its marijuana policies to become more permissive towards the substance. How would this insurance issue play out? It would be enlightening to know what the take of marijuana industry players like VIVO Cannabis Inc. (TSX.V: VIVO) (OTCQX: VVCIF) and TransCanna Holdings Inc. (CSE: TCAN) (FRA: TH8) is on this matter.