While many of the emerging risks facing risk managers lack legal clarity, few are as hazy as the effects of decriminalized marijuana on companies and public entities.
The 2012 passage of Amendment 64, which legalized the sale and use of recreational marijuana to adults 21 and older in Colorado, and Initiative 502, which did the same in Washington, has forced risk managers to consider a variety of issues related to employment law and safety.
Nonetheless, the overall transition to the Colorado law has been more seamless than some anticipated, said Andrew Stephenson, Denver-based risk and insurance manager at the University of Denver, noting an earlier law legalizing medical marijuana was a precursor for risk managers.
“Colorado has had medical marijuana for a while and it was hardly restricted to medical use,” he said. “So we have been dealing with a somewhat legalized situation for a while.”
One concern in the wake of the enactment of Amendment 64 is a rise in crimes such as robberies, Mr. Stephenson said.
“From a risk perspective, there have been some unique challenges,” he said. “One of the situations we are concerned about is potential for crime because marijuana businesses can't use banks.”
Insurance Information Institute Inc. President Robert Hartwig said the underwriting challenge the insurance industry faces with legalized marijuana is similar to the challenges it faces with other potentially dangerous substances such as prescription painkillers.
“There are a countless number of substances, many of them already legal, that can lead to somebody's impairment on the job and potential injuries to themselves, co-workers or third parties,'' Mr. Hartwig said. “There's nothing necessarily that leads insurers to think that marijuana will be any different than a drug approved by the Federal Drug Administration or a legal intoxicant such as alcohol.''
While Colorado law contains a “lawful activities” statute that forbids companies from firing people for activities performed off duty and off premises, a controversial case centering on the statute is under consideration by the Colorado Supreme Court, said Vance Knapp, a Denver-based member in the labor and employment practice of law firm Sherman & Howard L.L.C. Plaintiff Brandon Coats, a quadriplegic licensed to use medical marijuana, was fired from his job as a customer service representative for Dish Network L.L.C. after he failed a random drug test. Mr. Knapp said the outcome of Coats v. Dish Network L.L.C. will be noteworthy because, while Mr. Coats was permitted to use marijuana under state law, it is still illegal under federal law.
Even in the wake of the passage of the state laws, employers still get to determine their own marijuana policies, Mr. Knapp said. “Employers and risk managers have been concerned about whether to accommodate employee marijuana use,” he said. “Even in Colorado and Washington, you don't have to allow it at work.''
Philippe Lebel, Los Angeles-based associate in the labor and employment practice group for law firm Drinker Biddle & Reath L.L.P., agreed that employers maintain the upper hand when dealing with marijuana policies.
Decriminalization “doesn't necessarily affect employers and risk managers,” he said. “Employers are still completely privileged to prohibit their workers from using marijuana on duty.”
Nonetheless, Mr. Knapp suggested that risk managers carefully review any employee handbooks and personnel polices regarding marijuana and clearly communicate expectations to employees.
“The biggest problem companies and risk managers may face is the misperception by some employees that they have a constitutional right to use marijuana,” he said.
Moreover, Mr. Knapp said risk managers need to be mindful of the potential effect their marijuana policies for guests and customers will have on their insurance. For example, a bed and breakfast in Colorado will have to carefully consider whether or not to allow guests smoke marijuana in rooms.
“From an insurance standpoint, you have to be careful,” he said. “We have not seen underwriters include marijuana exclusions into general liability policies yet, but we imagine that it's just a matter of time.”