Medical marijuana dispensaries dealt major blow as company pulls insurance policy

Companies granted licenses to grow and ultimately sell medical marijuana were dealt another blow Wednesday.

Insurance company HEMIC (Hawaii Employers’ Mutual Insurance Company) announced it will stop providing workers compensation insurance to seven of the eight businesses waiting for the green light to begin selling their product in dispensaries.

State law requires all companies to provide workers compensation for employees.

The news came without warning. Thirty-day police cancellation notices were sent after what HEMIC calls a thorough legal evaluation of state and federal law regarding the production and sale of medical marijuana in Hawaii.

“HEMIC has received two outside legal opinions regarding its role in providing workers’ compensation coverage to Hawaii’s medical marijuana dispensaries. These legal opinions clearly acknowledge that HEMIC and its board of directors have potential exposure for criminal liability based on federal law applicable to marijuana businesses. After receiving these legal opinions, the HEMIC board has voted unanimously to discontinue these policies and fully refund all premium payments to any dispensaries currently insured by us,” HEMIC CEO Marty Welch said in a statement. “While we regret that this decision necessitates new workers’ compensation coverage options for the dispensaries, it was imperative that the HEMIC board take swift action in accordance with its fiduciary responsibilities. This is strictly a legal decision and in no way expresses any moral judgment on the use of marijuana nor in any way refutes the potential medicinal value of marijuana in the treatment of chronic pain or other medical conditions.”

The state Department of Health says it is still looking into how this could affect the program.

“The next 30 days may be challenging if the affected dispensaries cannot obtain workers compensation coverage from an alternate insurance company,” the department said in a statement. “The Department of Health will continue to work with all licensed dispensaries to determine if and how this change affects dispensaries’ businesses and what steps the dispensaries will take toward ensuring access to safe medical marijuana products for registered patients throughout the state.”

Mike Takano, CEO of Pono Life Sciences, says this puts everyone in uncharted territory. The company has a license for Maui County, and has already invested millions into the venture.

“I believe that we have options in front of us, but we have to deal with a denied premium. The chances of us getting a competitive rate after that is difficult, so ultimately it’s going to take a little bit more time and potentially more cost to the patient,” he said.

Despite the setback, Takano says his priority remains on those who have been waiting for years.

“Our focus is 100 percent on the patient,” he said. “We want to provide the highest quality product to patients as well as provide the highest level of service for patients.”

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