Out Front Ideas with Kimberly and Mark, a webinar series from Sedgwick and Safety National held a presentation yesterday about the legal marijuana landscape and where the cannabis industry is expected in move leading up to the next presidential election.
The expert speakers for the webinar, entitled “Cannabis Confusion: Separating Fact from Fiction,” were Dr. Teresa Bartlett, SVP, Senior Medical Officer for Sedgwick Inc, and Ian Stewart, Chair of the Wilson Elser cannabis law practice, which began four years ago in Los Angeles.
The discussion kicked off with the business-side of marijuana legalization, with Stewart explaining that the cannabis industry now touches most American workplaces. Medical marijuana is legal in 33 states and Washington D.C., while recreational marijuana is legal in 11 states. Further, CBD, one of the dozens of cannabinoids in marijuana that is believed to have therapeutic effects, is protected in all but four states (Idaho, Kansas, South Dakota, and Nebraska). Both categories are expected to grow, though perhaps not until after the 2020 election.
“With the farm bill passing last year, we now have hemp programs that are coming online and those are expected in almost every state, 46 or 47 hemp programs,” Stewart said. “But with the medical and adult-use [recreational] programs, it’s really organized by license types. You typically have cultivator licenses, processor licenses, distribution or transportation licenses, testing facilities, and retail.” Stewart explained further that licensure is split into two state models: the Florida vertical model in which there are few licenses and license recipients have every type of license once they are approved, and the California model, in which there are hundreds of licenses, but that they may only be approved for one part of the business and must get a local permit. The new recreational states like Illinois and Massachusetts, Stewart said, are hybrids of the Florida and California models
Host Mark Walls followed up Stewart’s delineation of the license models by asking what the prospects are for New York and New Jersey to become recreational states, noting that there was an expectation for these states to pass recreational legislation this year but that both failed. “I think that the chances are really good in New York,” Stewart said. “It was a close vote, there were some issues that got in the way, primarily involving some tax issues and some social equity issues.” The situation is similar in New Jersey, which is expected to vote in the middle part of next year.
At the federal level, Stewart said that the 2020 election coming up and the impeachment proceedings levied against President Trump will likely overshadow any efforts to reschedule marijuana. “I’m not terribly optimistic that further marijuana protections are going to be argued or voted upon, particularly in the Senate” he said. “We did have the Safe Banking Act pass the House, but I don’t see that getting a Senate floor vote. The primary obstacle is Senate Majority Leader Mitch McConnell, who despite being a vocal supporter of hemp and CBD, has not allowed cannabis-related measures to have a vote in that chamber.” Stewart also said, however, that there is more of a sense of urgency surrounding federal legislation, because of the vaping illness crisis currently unfolding across the nation. The deaths have been associated with illicit THC vaping liquid, especially those containing an oil-based vitamin E acetate.
On the insurance side for cannabis companies, Stewart said that the market looks healthy. The emphasis is still on product liability and D&O, but workers’ comp is in the mix as well. “Right now we’ve got between 25 and 30 carriers that are actively marketing and writing policies in the cannabis industry [mostly in surplus lines],” Stewart explained. “There are multiple options for licensed operators, prices are still higher, but the limits are going up and there’s excess coverage available.”
For more information about the context of today’s legalization debate, Stewart suggested a recent whitepaper from the National Cannabis Industry Association (NCIA), which explains the problems with simply rescheduling marijuana (which would subject the legal industry to conflicting regulations around government agencies) and instead advocates for affirmative regulation through federal legislation.
To watch the entire presentation, including the second half involving the medical side of cannabis in legalized states, visit the Out Front Ideas website here.