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Michael Lawrence Varon, PLLC Michael Lawrence Varon, PLLC
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Workers’ Comp Challenges For Cannabis Industry


Marijuana legalization is a controversial topic across the nation. Indeed, the states are divided on it, with only 19 states legalizing the drug for recreational use. Another 20 have legalized it for medicinal use only.  In addition, marijuana is not legal at the federal level, so there is confusion as well as numerous challenges for those who work in the cannabis industry.

New York just made marijuana legal last year. In March 2021, the state made recreational marijuana legal for adults over the age of 21. A resident can possess 3 ounces (85 grams) of weed and up to 24 grams of concentrate.

Despite its legal status, marijuana causes a lot of complications for those who make a living off of it. Because banks are federally insured and marijuana is federally illegal, many banks will not work with cannabis dispensaries. The same reasons apply to credit card companies, which  means cannabis dispensaries must work with cash only.

These aren’t the only challenges these marijuana-based businesses face. There are also issues when it comes to insurance, particularly workers’ compensation. Not many companies are willing to insure cannabis companies. There may be 20-40 insurance companies, each with different policies, offerings, and prices. In contrast, for a construction company, there would be 200 or more companies with competitive prices.

Of those 20-40 possible insurers, about 90% are in surplus lines, which means higher rates and more taxes. So there are a lot of challenges involved for those who work in the cannabis industry.

Insurance companies are hesitant to enter the cannabis space for many reasons. The main reason is that the drug is not legal at the federal level. Then there is the issue of reputation. Many companies do not want to be associated with drug use, as there is still, to some degree, a stigma attached to marijuana. Also, there is concern about payment for insurance, as most cannabis companies cannot use traditional bank accounts. Those who are able to get bank accounts can see them closed or frozen at any time. This can lead to numerous cancellations and rewrites. In fact, banking issues are one of the biggest problems for insurers. This is especially true given that workers’ compensation insurance is based on payroll. When the cannabis companies have to constantly switch banks for payroll and insurance, it really messes things up.

Plus, many operators are unaware of laws and codes. They tend to come from black markets. They don’t know how to make their business safe, which is an issue on many levels.

Contact Us for More Information About Workers’ Compensation Benefits 

While marijuana is legal at the state level in various states, it is still illegal at the federal level, which makes it challenging when it comes to insurance and other issues.

Injured at work? What benefits are you entitled to receive? Contact a White Plains workers’ compensation lawyer from The Law Office of Michael Lawrence Varon to learn more about your legal options. Schedule a free initial consultation today by calling (914) 228-1770 or filling out the online form.


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