To date, 18 states and the District of Columbia have legalized recreational marijuana and 37 states now permit its use for medicinal purposes, according to Business Insider. Nonetheless, the insurance industry continues to struggle to keep up with the swift pace of marijuana legalization.

Here are four key considerations for independent agents looking to navigate the muddy waters of legalized cannabis and personal lines insurance:

1) Cannabis and home insurance. The hesitancy of insurance carriers to set firm rules around coverage of marijuana losses stems primarily from the conflict between states that have legalized cannabis and current federal law which still considers marijuana illegal under the Controlled Substances Act (CSA) and classifies it as a Schedule I drug with “no currently accepted medical use in treatment in the United States."

But it's not only fear of federal reprisal that's keeping them in limbo. The disparity between state and federal law can wreak havoc on the enforcement of contracts between an insurer and its clients, according to attorney Richard Blau, a shareholder at GrayRobinson and head of the firm's medical marijuana team.

“On the one hand, you have a lot of insurance companies that operate in many different states, which means they arguably fall under federal jurisdiction," Blau says. “They're worried their charters could be challenged under federal law if they write policies that include coverage for cannabis loss. But you also have what I think is the larger issue of judicial precedence that says insurance contracts are not enforceable under federal law."

According to experts, independent agents need to do the arduous work of familiarizing themselves with their state's marijuana laws, examine various carriers' policies surrounding marijuana coverage, and be honest and upfront with their clients.

In other words, if you write policies in a state with legalized marijuana, you should ask homeowners if they expect cannabis to be a covered loss.

2) Cannabis and life insurance. According to industry experts, life insurers are still a bit erratic when it comes to determining what rate class to offer marijuana users—and the guidelines can change at any time.

For example, one company will offer their lowest “preferred plus" rates for use up to eight times per month—but they'll only offer a table B smoker rate for nine to 16 times use per month, which is a rate about seven to eight times higher in cost than their lowest “preferred plus" rate. Meanwhile, it will decline for use more than 16 times per month.

On the whole, life insurance underwriting in states with legalized marijuana use is now more lenient than in years past, and a handful of life insurance providers don't even ask about marijuana use in their health questionnaire.

3) Cannabis and auto insurance. One of the most significant questions is whether more recreational pot legalization has led to more incidents involving so-called drugged driving.

In 2018, 12 million U.S. residents (4.7%) age 16 years and older reported driving under the influence of marijuana during the past 12 months, and 2.3 million (0.9%) reported driving under the influence of illicit drugs other than marijuana during that time, according to the Centers for Disease Control and Prevention (CDC).

Whether legalized marijuana will have any relevant impact on auto insurance premiums remains to be seen, and experts say independent agents probably don't need to be concerned with it all that much.

"It's unlikely that there will be an immediate uptick in the cost of insurance with the legalization of cannabis," says Nestor Hugo Solari, co-founder and CEO of Sigo, an auto insurance provider, “one argument being that legalization may not necessarily increase frequency of use in certain states or regions."

4) Cannabis and health insurance. When it comes to health insurance, don't expect it to cover the cost of medicinal marijuana even if the policyholder lives in one of the states that have legalized it for medical use.

“Even though cannabis has been a licensed treatment for things like cancer and glaucoma for decades, insurance companies refuse to cover it," says Rex Freiberger, CEO of License to Vape. “Once marijuana is legalized on a federal level, I think it will still be some time before insurance companies decide to cover it."

Nick DiUlio is an analyst and writer for InsuranceQuotes.com, which publishes in-depth studies, data and analysis related to auto, home, health, life and business insurance.

To read more about cannabis and personal lines, look out for the November 2021 issue of Independent Agent magazine.