Plants grow at the home of Jeremy Nickle, in his backyard in Honolulu, Hawaii. Nickel, who owns Hawaiian Holy Smokes and is applying for a dispensary, grows a variety of strains and has a medical marijuana card. (AP Photo/Marina Riker)
As reported by Howard Dashefsky on KHON2 on June 28, the business of selling medical marijuana in Hawaii just became more complicated.

Insurance company Hawaii Employers’ Mutual Insurance Company (HEMIC) announced it will stop providing workers’ compensation insurance to seven of the eight businesses waiting for licenses to begin selling their product in dispensaries. This makes it even more difficult to start operating a medical marijuana dispensary because state law requires all companies to provide workers compensation for employees.

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

Related: 5 developments impacting medical marijuana in workers’ compensation

“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.”

Statewide impact

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.”

HEMIC’s actions underscore the issues businesses across the U.S. are facing as states legalize marijuana for a variety of purposes while it remains a federal offense to possess or sell marijuana.

Related: Insurance implications of legal marijuana: Questions continue to roll in

This story was first reported on KHON2, Honolulu, Hawaii, by Howard Dashefsky. More information is available on KHON2’s website.