Although the recreational use of marijuana officially became legal in Canada on October 17, 2018, cannabis still remains a heavily debated topic for both consumers and business owners. The laws regarding the use and selling of cannabis differ from province to province. In Ontario, businesses in the marijuana industry must carry $15 million in cannabis insurance, specifically Product Recall coverage, while in British Columbia, the requirement is $10 million. These inconsistencies have caused many insurance carriers in Canada to be wary of providing coverage. The same can be said about medical marijuana insurance. Although Canada was a pioneer in approving medical marijuana, with courts ruling that Canadians have a constitutional right to use cannabis medically, insurers are still treading carefully, and coverage varies. Many Canadians assumed insurance rates would go down because of last year’s law change, but that might not be the case after all.

How Marijuana Impacts Insurance Rates

Although both recreational and medical marijuana use are now legal in Canada, the negative social stigma associated with cannabis hasn’t disappeared. It is still being factored into the formulas insurance companies use to price their policies, but the key lies in what is considered to be a low-risk user and a high-risk user. This means that when you apply for life insurance in Canada, you will be asked about your frequency of marijuana use. If your marijuana use isn’t chronic, then you won’t be penalized in the same way a cigarette smoker is — premiums for smokers can be three times higher than those of non-smokers.

Insurance companies consider a smoker to be anyone who has had tobacco in the last 12 months but, according to The Canadian Life and Health Insurance Association, Canadians who only smoke up to two marijuana joints a week are considered low-risk users and should not pay more for their life insurance premiums than non-smokers. Insurance companies that follow this recommendation will class occasional marijuana users as "non-smokers," and you will likely not be seen as a high insurance risk. However, now that the ban on marijuana has been lifted, a new era of research is emerging. As more and more research is revealed regarding the plant, extracts, and pharmaceutical usage, the landscape of insurance policies and premiums will change.

The Impact of New Data

Insurance companies are going to start using more and more data to evaluate the risk and exposures of their potential clients. A person’s occupation, their activities and hobbies, their income, and even the area they live are factors that will be used to determine how to underwrite them. While term and permanent insurance policies don’t have much of a difference in terms of cannabis use, fully underwritten policies and simplified issue policies do. The former has lower rates but more stringent requirements. Your application may include a blood test, a urine sample, and less flexibility in regards to cannabis usage. The latter has no medical tests, just a series of health questions, and while the premiums are higher, the restrictions on usage are a little more relaxed.

The Bottom Line

Legalized cannabis is here to stay so you can breathe a sigh of relief and safely enjoy the occasional joint without being charged a higher insurance premium. However, the definition of safe use is still being determined. No matter how much cannabis you consume throughout the week, you should never lie on your life insurance application. If you aren’t completely truthful and your medical exam reveals you recently consumed cannabis, then be prepared to set off a lot of alarms. If your insurance company senses any red flags, that’s when your premiums may substantially increase, or your application is denied altogether. You may also have to undergo intrusive medical testing.