US Industry Regulators: Cannabis Case Studies - Healthcare
Three examples of companies in the healthcare sector that have dealt with regulatory obstacles related to cannabis are PharmEx in Oregon, Florida medical marijuana dispensaries Curraleaf and Liberty Health Services, and health insurance providers.
PHARMEX AND OREGON
- In 2014, Oregon legalized cannabis for recreational use, with the Oregon Liquor Control Commission (OLCC) being put in charge of the recreational industry in 2015.
- Many medical marijuana providers turned to the recreational marijuana industry after its legalization in Oregon, putting sick individuals at risk in the process, according to the Guardian.
- Companies like PharmEx, a medical marijuana processing business, have felt the impact of the shift of focus towards recreational marijuana in the state. It is now one of three medical processors left in Oregon, and only one medical dispensary in the state carries its products.
- Since PharmEx is only medically licensed, recreational dispensaries can't sell or carry its products. The recreational dispensaries are bound by legal requirements that mean the products they sell must be from companies with OLCC licenses. However, the OLCC isn't accepting new applications to obtain licenses, which is a problem for PharmEx and patients that use their products.
- The regulation of THC content by the Oregon Health Authority is also an issue for companies like PharmEx. The maximum amount of THC in medical edibles (100mg) isn't enough for very ill patients, according to PharmEx's owner.
- Karla Kay, PharmEx's chief of operations, says that a few patients are buying higher dose medical marijuana products illegally because of the effects of Oregon's regulations. Another factor contributing to the black market growth is that Oregon is producing an excess of cannabis flower, which is leaving the regulated market.
- As stated in a Guardian article, PharmEx's owner believes the way to address the current regulatory issues with medical marijuana in Oregon is to get rid of dispensaries. Instead, patient-grower networks should be the focus to make sure patients get the medical marijuana they need.
FLORIDA MEDICAL MARIJUANA DISPENSARIES
- Medical marijuana was approved in Florida in 2016, even though it is still illegal at the federal level. By late 2018, they had issued 150,000 medical marijuana cards to patients and 14 licenses for firms.
- State laws only allow 12 licenses to be issued per 100,000 registered patients, which is why only 14 licenses have been issued so far. It has made firms like Liberty Health Sciences rush to secure one of the licenses since medical marijuana was legalized in Florida.
- According to BisNow, each firm or vendor is in charge of everything from cultivation to sales in Florida, making it expensive to start a medical marijuana dispensary. The CEO of Liberty Health Sciences, one of the 14 licensed firms in the state, believes capital is one of the obstacles in the industry.
- Another obstacle Florida medical marijuana firms have faced are municipal bans on dispensaries in Florida cities, even though each firm can operate a maximum of 30 dispensaries. Due to this, Liberty Health Sciences' team had to research municipalities that allow dispensaries when deciding where to place their locations.
- Landlords have also been hesitant to rent to dispensary firms in Florida for reasons related to cannabis regulations, according to BisNow. Liberty Health Sciences was only able to rent after showing their commitment to security, since dispensaries are cash only due to the illegality of marijuana at the federal level. Curraleaf had to address landlord concerns as well that municipalities might change their laws and then the dispensary locations would be deemed illegal.
- Another related regulatory issue for dispensaries and medical marijuana firms in Florida is maintaining patient privacy. Medical information is protected in Florida under a state breach notification statute, which means dispensaries will have to make sure patient information is secure.
- Furthermore, if marijuana is legalized at the federal level, Florida dispensaries may have to comply with the Health Insurance and Portability and Accountability Act (HIPAA). The agency that enforces HIPAA believes dispensaries should be classified as healthcare providers of medical marijuana, which means they would have to protect patient privacy under HIPAA regulations as well.
HEALTH INSURANCE PROVIDERS AND WORKERS' COMPENSATION
- Marijuana is classified as a Schedule 1 controlled substance and is illegal at the federal level. Since health insurance companies tend to operate in multiple states or on a national level, they don't want to risk prosecution by covering medical marijuana costs.
- Additionally, the FDA hasn't approved medical marijuana, which makes health insurance companies less likely to cover it.
- Health insurance companies like Humana have stated that an FDA approved medical marijuana products could be covered based on a person's drug coverage in the future. Until then, they will not offer a prescription drug benefit.
- To work around the fact that health insurance companies will not cover the costs of medical marijuana due to federal regulations, workers' compensation in some states covers it as part of treatments for workplace injuries.
- An example of how workers' compensation has circumvented the effects of federal regulations on health insurance providers was in the case of Greg Vialpando in New Mexico.
- Vialpando injured his back in 2000 while working for Ben's Automotive Services, and then used medical marijuana as part of his treatment. He was able to get the costs of the marijuana reimbursed to him by the company he worked for through workers' compensation, rather than health insurance.
- Vialpando credits marijuana for improving his life in a New York Times article. The opioids he initially used for his injury caused him to withdraw to spend time by himself and lose interest in food.
- Vialpando's testimony about his experience with medical marijuana helped a bill fail in New Mexico. The bill would have exempted workers' compensation insurers from covering medical marijuana costs.
In order to find case studies in the healthcare sector where companies faced regulatory obstacles related to cannabis, the research team first isolated what types of companies or individuals to research in the healthcare sector. Initially, we looked for case studies related to medical professionals (doctors, nurses, or hospitals), medical marijuana dispensaries, and health insurance companies. After this initial research, two constraints in finding case studies became clear.
First, most issues that healthcare or medical professionals face related to cannabis stem from constraints on research or knowledge from federal regulations. Medical professionals or universities have trouble researching marijuana and its effects due to the illegality of marijuana at the federal level or because it is not FDA approved. Therefore, most of the case studies in this area focus on how universities or healthcare professionals can do further research to help legalize marijuana or further their knowledge about its health effects, rather than how regulations affect how hospitals or doctors prescribe medical marijuana currently.
Second, due to marijuana being illegal at the federal level and not FDA approved, health insurance companies do not tend to cover the costs of medical marijuana. Additionally, since some Americans receive health insurance coverage through their workplaces, case studies we found in that area were mainly related to individuals being fired for marijuana usage. However, in researching health insurance companies, we discovered that individuals are using workers' compensation in some states to cover medical marijuana costs when health insurance will not. Therefore, we decided to use Vialpando's case and the usage of workers' compensation to show how the regulations on marijuana and their effects on health insurance companies are being addressed.
After finding the health insurance and worker's compensation case study, we then looked into medical marijuana dispensaries that have faced issues with regulations. We included the dispensaries as part of the healthcare sector since they supply medical marijuana to patients after medical professionals have deemed it as part of their treatments. We found two case studies of medical marijuana dispensaries in Oregon and Florida that were facing difficulties due to regulations in our search and included them. Combined with the health insurance and/or workers' compensation case, we then had a total of three case studies to address the research request.