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For insurers, no rush to offer pot coverage

Marijuana may be the fastest growing industry in the U.S., with expected yearly revenue of $11 billion by 2019. So, why aren't major insurance companies providing coverage?

Duh, it's still illegal under federal law, dude.

Although "medical" marijuana is now legal in at least 22 states and the District of Columbia, for the most part "recreational use" isn't, even though a majority of the country now favors it, according to a recent Gallup poll.

Even teetotaler states are greedily eyeing the $61 million in taxes and fees that Colorado derived in only one month after it passed legislation allowing both medical and recreation use. That's "enough to quash any leftover furor from opponents," predicted High Times.

Medical marijuana dispensaries opened in Illi... 01:17

But Chicago attorney Jason Taylor, who represents insurers, said "a dark cloud" remains over the marijuana industry that's keeping carriers on the sidelines. "The federal and state governments are butting heads -- so to speak -- on this," said Taylor, "and even within the states there's legal wrangling."

These issues aren't likely to be cleared up absent some definitive research on the medical value of cannabis, and until the U.S. Drug Enforcement Administration no longer sees Mary Jane as a "Class One" drug, tucking it into the same envelope with heroin.

The marijuana market is ripe for all sorts of coverage, starting with crop insurance. The manufacturers of both marijuana cigarettes and edible products need general liability insurance. The same is true of "pot shops" and retail outlets in malls and on boardwalks where it's sold. The malls themselves may face prohibitive premiums if they allow these outlets.

Workers' compensation insurers and the companies they cover are scratching their heads over liability. Maybe Colorado techies can sit around and have a bull session while smoking a jay, but what about the stoned forklift operator stacking a row of flat-screen TVs? Can you find out if an employee is toking without violating his privacy? And if you don't, are you liable for the damage and injury he does?

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"Some states say you can't terminate a worker for failing a drug test, such as Minnesota and Delaware," noted Taylor. But, surprisingly, the Colorado Supreme Court has upheld the firing of a worker who smoked pot outside the office.

There are so many alternate realities, and every answer can be different, even in the same state, said chief actuary James Lynch of the Insurance Information Institute.

For example, New Mexico's court of appeals ruled that workers' comp required an employer to reimburse a man for the cost of his medical marijuana. But the legislature's House Judiciary Committee has set in motion a bill to stop this.

And the controversy doesn't end at the front doorstep, either. Insurer Nationwide balked at having to pay for a medical marijuana patient whose "lab" caught fire, arguing that it was an "increased hazard" Nationwide didn't know about. A court backed the carrier.

Insurers themselves are ambivalent. USAA was willing to pay nearly $9,000 to a Hawaii homeowner whose 12 medical marijuana plants were stolen. But when the homeowner pressed for an additional $37,000, the carrier argued that it didn't have to pay because under federal law, the plants were illegal. The court, with a wink of its legal eye, agreed.

The abundance of different cases, with so many different decisions, will keep an army of lawyers employed for the foreseeable future. Even cops on the beat are weighing in, perhaps frustrated by their inability to stop drivers who may be stoned. Twelve Midwestern sheriffs have sued, claiming Colorado's liberal law has forced them to violate their oath to the federal Constitution.

There are two possible answers. One is to see some definite research from the U.S. Food and Drug Administration on the actual value of medical marijuana. Thus far, the only accepted evidence, mostly with regard to easing pain, is anecdotal.

The other is to accept the inevitable and pass a federal law that will at least allow medical marijuana. The CARERS (Compassionate Access, Research Expansion and Respect States) bill has united liberal U.S. Senators Corey Booker and Kirsten Gillibrand with conservative Rand Paul, but thus far it's going nowhere.

Meanwhile, most insurers are just waiting it out, either refusing to insure Mary Jane or putting a prohibitively high price on their premiums.

"Insurers don't want to be seen violating federal law," said Lynch. "But if marijuana were legal, they would pursue it."

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