Health insurers sued, USDA says no to cannabis farmers, and Colorado’s declining cannabis sales.
By Kaitlin Domangue
Health insurance providers sued for not covering medical cannabis in New Mexico
In 2021, a bill was passed to eliminate cost-sharing for mental health prescriptions in New Mexico.
Now, Ultra Health is suing health insurers (including some big names like United Healthcare and Blue Cross Blue Shield) for violating New Mexico state law because they don’t cover the costs associated with medical cannabis.
The suit was filed last week and one of the plaintiffs is Sen. Jacob Candelaria of New Mexico’s 26th District. Candelaria consumes cannabis to manage symptoms of PTSD.
Ultra Health’s President, Duke Rodriguez, estimated that about 55% of New Mexico’s patients consume cannabis (at least partly) for PTSD-related symptoms.
According to this bill – SB317 – “cost-sharing” includes deductibles, copayments, coinsurance, or basically any other form of financial obligation outside of a premium for behavioral health services.
The definition of “behavioral health services” in this bill is quite broad. At face value, there’s no reason why cannabis should not qualify.
The bill’s language is quite comprehensive and makes nearly every type of behavioral treatment eligible, including intensive outpatient therapy and all medications. In a normal world, cannabis would qualify.
But my friends, this is the cannabis industry we’re talking about here, so leave your logic at the door because it won’t be needed past this point.
Health insurance companies don’t cover medical cannabis in the U.S. because it’s federally illegal, so this is why New Mexico’s state law isn’t taking hold for cannabis patients.
I feel like a broken record at this point blaming the federal illegality of cannabis for every problem in our industry. I’m low-key starting to annoy myself by constantly talking about it.
But what the heck man, it really is. This problem crops up in every area of this space. It’s impossible to not talk about.
In Canada, medical cannabis is an eligible medical expense, according to the Canadian Revenue Agency. Canada federally legalized cannabis in 2018, so they have transitioned towards insurers covering associated costs.
It’s not uncommon for a patient to pay $200, $300, or sometimes $400+ every single month for medical cannabis. Some need up to $1,400 in medication every month, but can’t swing the cost. Not to mention the cost to get and renew a medical cannabis card.
Speaking as a medical cannabis patient myself; having insurance offset even some of the associated costs would help so many people.
This is one reason why the illicit market is still thriving (worth about $8 billion annually). The price is oftentimes lower than the dispensary – and there’s no sales tax or need to have a medical card.
This suit will probably not go in the favor of Ultra Health. I foresee a few arguments taking hold in the courtroom:
- Cannabis is federally illegal and these insurance companies aren’t willing to violate federal law.
- Insurance companies have the freedom to add or deny drugs to their list of accepted medications (but New Mexico’s SB317 might supersede this freedom).
- And a potential defense but may be less likely – the insurance companies will argue that doctors aren’t actually prescribing cannabis, it’s just recommended.
The first argument will definitely be made and it holds the most weight. Federal law supersedes state law because The U.S. Constitution calls the federal law the “supreme law of the land.”
However, in New York, a bill recently passed the Senate mandating medical cannabis coverage for public insurance programs.
For federal programs like Medicaid and Child Health Plus, there would “presumably not be federal matching funds” until federal policies are changed.
But New York’s Medicaid and Child Plus Programs have always “covered people and services for which we do not receive federal match”, according to a justification memo attached to the bill.
So, New Mexico’s public health insurers might be forced to cover costs, if they follow New York’s lead at all. Worker’s compensation must cover the cost of cannabis in some states, New York included.
I’m interested to see how it all unfolds and of course, I’m rooting for cannabis to be covered under insurance!!
USDA’s newest program excludes cannabis farmers – again
Farmers are so undervalued, across all of agriculture, but especially cannabis farmers.
The USDA (another federal program!) announced an Emergency Relief Program last month, focused on “commodity and specialty crop producers impacted by natural disaster events in 2020 and 2021.”
The program allocates $6 billion to these farmers, specifically to offset the damaging costs associated with the pandemic and catastrophic natural disasters, including droughts and wildfires.
Cannabis farmers are no stranger to either of these disasters, and the other disasters covered under this program, but you already know they will be receiving zero help from this program because cannabis is federally illegal.
Do you see what I mean? Low key annoying to hear myself blame federal illegality every second of the day but again – what the heck do I do, people. The American cannabis industry will hit this will with every turn until the federal policy is modified.
At least 20 Oregon cannabis licenses had operations in the wildfire zone during the devastating 2020 wildfires on the West Coast.
The Oregon Liquor Control Commission, which oversees the state’s cannabis program, said 12 of these were complete losses. And of course, wildfires also damaged cannabis farms in California.
The West Coast has experienced severe droughts over the last few years and cannabis farms have felt that.
One study found that a single large almond farm in the Central Valley uses 33x more water than all of Humboldt County’s licensed cannabis farms combined – despite the mainstream claim that cannabis farms are sucking up the water.
But, some illicit farms have been reported to steal water, depleting water for legal operations to use.
And as we all know, many illicit farms are in operation because operating a legal business is next to impossible due to the complicated barriers to entry.
If we want to avoid things like water theft: states need to make operating a legal cannabis business a heckuva a lot easier.
It’s hard to not see cannabis’ federally illegal status as intentional. The federal government is wholly aware of the struggles facing cannabis businesses.
And if they aren’t: please remove them from political office and order a head examination because we are NOT silent about the challenges. It crops up in literally every area of business because of federal illegality – the government knows what’s going on.
So when I see things like this, I just get angry and continue hoping for federal reform. But if we don’t get it soon – we need to be prepared to fight and continue moving forward.
So, is cannabis stuck?
The United States’ separation of state and federal laws ensures that state-legal industries can operate without federal interference, even if they stall. We know this.
State legislation is gaining great momentum across the country to compensate for the lack of federal policy, beyond just legalizing and regulating cannabis.
I hope to see more states tackling issues in their own backyard, like health insurance and grants for farmers facing circumstances out of their control.
Colorado’s sales decline continues
If you didn’t know, Colorado’s cannabis sales have been sharply declining for some time. April was recently marked as the 11th consecutive month of declining sales in the state.
April saw a 5% dip month over month from March, but a whopping 25% decrease since April 2021. Market data shows Colorado generated $611 million in cannabis sales for the first quarter of 2022.
In 2020, Colorado cannabis sales totaled nearly $2.2 billion in sales. COVID-19 had a positive impact on the cannabis industry, unlike many others. Stimulus checks, unemployment benefits, and stay-at-home orders = a lot more cannabis.
But now that stay-at-home orders have loosened, dispensaries aren’t seeing as much traffic. More and more states are also legalizing cannabis and Colorado isn’t the only place tourists can go visit a recreational dispensary.
The price of wholesale flower in Colorado has gone down by 46% since January 2021.
In January 2022, a new set of laws restricting medical cannabis recommendations took effect.
Among other barriers, Colorado’s new laws limit patients to 8 grams of concentrate as opposed to the previous 40 grams. It’s quite the change, reducing the limit by more than 133%.
Some stores, like Denver dispensary chain, Buddy Boy, were completely pummeled by Colorado’s policy change. The retailer was forced to close all seven locations after limits were imposed on medical cannabis purchases, which totaled about 90% of Buddy Boy’s revenue.
Colorado isn’t alone in declining cannabis sales. The United States – and the world – virtually closed down for several months in 2020. Cannabis stores weren’t impacted. Once the world opened back up, we saw the same falling sales in every other legal state as we did in Colorado. The same was observed in Canada.
The beginning of COVID-19, no doubt, bumped the cannabis industry’s sales. As we settle back into normal life, sales are settling back into place.
In addition, lockdowns prevented many emerging markets from starting operations. In Missouri where I live, I know a few medical cannabis licenses weren’t quickly able to begin construction because crews couldn’t have more than 10 people on-site at a time.
Now that we are restabilizing, I predict the tail-end of 2022 will see a spike in cannabis sales.
At the very least, a renewed optimism within our industry. Several states are expected to vote on cannabis laws in November, whether recreational or medical, so 2023 could be a great green year for our space.