There are currently between 35,000 and 40,000 patients enrolled in Health Canada’s medical marijuana program. The entire market is worth between $80 million to $100 million.
The Canadian federal government is expected to legalize the recreational use of marijuana as early as this summer. The number of client registrations for medical marijuana in Canada reached nearly 270,000 by the end of 2017 and this number continues to escalate from here.
Anybody who’s hoping to get a piece of the cannabis market pie is watching closely as the Canadian government establishes the regulatory framework for production, distribution, and sales.
Everybody’s following very closely, not only for the date of legalization, but the issues around four plants per home, which the courts in Canada have deemed is a right of the individual. The government already has very stringent marketing by-laws and it looks like the senate’s looking to even take those a step further.
In Canada, we didn’t have a referendum, and a lot of business and professional associations feel like legalization’s been thrown in their lap. What’s legal and what’s not, how many plants will be allowed per home, what kind of insurance do commercial businesses need – the answers to these questions are critical for everyone involved in the cannabis sector, and especially insurance professionals.
Cannabis legalization is the biggest policy shift we’re going to see in our lifetime and it actually affects every industry, and the insurance industry definitely, because the insurance industry is not going to be able to move with their own regulatory changes until the federal government passes their regulations, the provincial government passes their regulatory by-laws, and also the municipalities. If municipalities choose to allow businesses in their communities, then what do those businesses look like and what kind of insurance will they need?
Based on the expectation of a Canadian federal law legalizing recreational adult use of cannabis, both regulations and investments in the industry are rising. As a result, growers, retailers and other businesses in Canada that have catered to the legal medical marijuana activity are anxious to see their investments move forward. This legislation, and the liability associated with it, is expected to impact large and small commercial cannabis growers as well as retail storefronts (dispensaries). Distribution of marijuana items is regulated by the provinces, based off the federal guidelines around the legal use of the substance.
The growth of businesses involved in the cannabis industry points to an increasing need for growers and retailers or dispensaries in each province to have the type of insurance they need to protect against an unforeseen liability that could threaten the existence of the business itself. Liability policies to protect property and products should be in place, while additional policies covering Directors & Officers (D&O) may be recommended.
At present, the stigma of illegality connected to marijuana is dissuading many insurers from getting their hands dirty and venturing too close to the industry. There’s a gap in the cannabis insurance market that will need to be filled once insurance professionals gain a better understanding of the product.
We are watching the legislation closely and will continue to stay current with this trending topic. Stay tuned for more!
NICHE Canada is a non-profit organization that educates stakeholders on cannabis production and its use in Canada. Lessons learnt from Washington State and Colorado!
