Courtland Sandover-Sly
Hey, you! Yes, you. Did you know that marijuana-related businesses qualify for employee benefits? Or property and casualty insurance? Things sure are changing fast in Canada these days, and there are some important opportunities you should know about.
To answer the first question: Yes, companies in Canada have already obtained and put into force some of the first industry-specific group insurance plans in the world. Insurance advisors are now working with MJ businesses in ways previously unthinkable. Health and dental coverage, critical illness protection, life insurance, and employee assistance programs are being offered to dispensaries, bakeries, mail-order services, and concentrate producers, both for-profit, and not-for-profit alike. Companies and charities that may have considered themselves uninsurable before are now finding a warm welcome from the insurance establishment. This industry-wide renaissance has created new stability and security for both the organizations and their employees.
What is a group benefits plan? The uninitiated might remember a group benefits plan as what their parents used to reduce the cost of their childhood visits to the dentist, or the card that their grandparents pulled out when they bought prescriptions at the drug store. The Great-West Life Assurance Company defines a group benefits plan as, “…an arrangement to share the financial risk of health-related expenses among a group of people who pay into a fund or pool, under one contract. With a group benefits plan, when a member of the group becomes ill or requires services, he or she is financially compensated by the plan, according to the terms of the contract.” Group benefits are often seen as one of the most fair and equitable ways of compensating employees, and many organizations seek out benefits plans to provide stability and security to their employees.
It might be said that the key test of an industry’s viability is its insurability. If this is true, then the marijuana industry is certainly viable. Some of Canada’s largest insurers, such as Great-West Life and Hub International, have already moved to offer their services to industry members. It is believed that Great-West was the first company in Canada to offer and place a group insurance contract with a marijuana-related company, outside of licensed producers under the current Marihuana for Medical Purposes Regulations (MMPR). This company’s adaptive nature has positioned it to become the preeminent provider of employee benefits for the MJ industry.
One of the most interesting concepts in the field of group insurance to pop up lately has been the plan for individual employees to be able to purchase marijuana products with their group health coverage. “Wait! What?” you might say. Yes, it is true. Employees covered under certain group insurance plans can use their coverage to purchase their medicinal marijuana. While there are some restrictions to this practice, they are certainly not very onerous. Because medical marijuana still does not have a valid DIN (drug identification number) it is not an eligible drug under the prescription drug policy. However, with the correct plan design, it can be covered with a physician’s prescription under Great-West Life’s Medical Reimbursement Plan or a health spending account. After the employee has consulted with a doctor and received a prescription to use marijuana for their ailments, the employee is able to purchase medicinal products from the organization that they work for, thus reducing the cost of that plan for said organization. Many dispensary owners have already found value in this, and indeed, may find it to be the best part of their plan.
For organizations that have previously found themselves uninsurable, the difference is like night and day.
They attract and retain employees, which helps minimize costs associated with high turnover. The organizations and their employees have access to insurance at a reduced cost, compared to most individual insurance plans. The premium they pay is tax deductible as a business expense. They have helped improve morale and increase productivity by providing financial security and support when their employees need it most. The ability to offer comprehensive group benefits packages to their employees means that the employees no longer have to pay out of pocket for dental and health services. For some workers, this is the difference between repairing a dental problem and suffering through the pain of it for years on end. Family coverage can be offered to those employees who seek it, thus providing children and other dependants with much needed coverage at crucial periods in their lives. Employee benefits plans can be designed to include a wide array of perks that people may not have previously expected, such as employee family assistance programs that offer access to counseling and behavioral intervention, and can also include consultations with specialists such as dieticians and naturopaths. Also, managers and owners can obtain increased coverage for themselves, should they have the need for it.
Brandon Wright, general manager of Victoria-based medicinal bakery Baked Edibles knows the value of an employee benefits plan. “It’s a business tool that everybody uses,” Wright said, “and I can’t see any reason not to offer it to my employees. It provides for a generally happier and better workplace when the employees know that you invest in them. ” Asked what he found the most valuable part of Baked Edibles plan to be, he replied, “The extra services, such as massage and chiropractic visits. Also, everybody uses their dental coverage.” The ability to offer such security to their employees is a blessing to many new entrepreneurs in the industry.
As mentioned above, employee benefits are not the only form of insurance available to marijuana-related businesses. Isaac Greenwood operates a specialized marijuana insurance program called Cann-Assure, and has recently found his niche as an insurance broker to marijuana-related business all across Canada. Isaac has been working with entrepreneurs and existing businesses in the MJ industry to protect their places of business from hazards such as property damage. The package can include coverage for employee liability issues that, in concert with an employee benefits plan, may function in a fashion similar to provincial workers’ compensation. When asked what he considers to be the most valuable service that he offers, Isaac said: “The ability for owners to buy insurance that will look after their unexpected and unwanted legal costs.” A lot of decision makers may be unaware that they are able to cover their legal costs in criminal and civil matters through insurance that Isaac provides. The peace of mind offered by such protection is astounding, and may mean the difference between a successful business and one that is shuttered.
Key qualifiers for any business looking for group insurance coverage are as follows. First, the company must operate in an eligible industry, such as retail or manufacturing. Second, the company must be willing to contribute to at least 25% of the cost of the plan. Third, the company should be financially stable, and ideally, in operation for two years or more (exceptions can be made) with a low rate of employee turnover. There are other considerations to be made. For instance, seasonal workers must work at least 9 months out of the year to qualify, and full-time employees should work at least 24 hours per week. In order to put together a quote for group insurance coverage, companies are simply asked to provide the age, gender, and occupations of their employees, as well as their wage/salary and province of residence. Insurers ask for this information in order to properly price out the cost for the companies; for instance, as women have longer life expectancies than men, they are able to purchase life insurance at a lower cost relative to their male counterparts. Another important consideration is whether or not the employees would need coverage for their families, or conversely, that they already have existing coverage through a spouse’s benefits plan. With this information in hand, group benefits providers will be able to properly assess the organization’s insurability.
With greater exposure comes increased scrutiny, and many marijuana-related organizations have been feeling the pinch as municipalities and community organizations begin to look for ways to limit their activity and, in some cases, get in on a slice of the pie. Anti-competitive, uncompassionate bylaws are being crafted in communities all over the country, with bureaucrats and naysayers leading the push to restrict the rights of both providers and users. Despite marijuana’s furthered acceptance as a legitimate medicinal tool, a war is still being waged against those who work in its favour. One of the greatest rebuttals a business can have is to say: “If the insurance companies can work with us, why can’t you?!”
(Editors Update: Great-West Life has removed themselves from the cannabis market.)
Courtland Sandover-Sly is an independent financial advisor from Victoria, BC. Born and raised on the west coast, he is heavily involved in his home community of Central Saanich, BC, a community in Greater Victoria. He can be reached at 250-686-2502, or courtland@sandover-sly.com.
