Part 1: Medical Marijuana 101


Recreational cannabis is on track to be legalized in Canada October 17, 2018.  Medical Marijuana (MM) has been legal in Canada since 2001.  There are approximately 235,000+ registered users in Canada and this number is expected to grow.  

The impact of recreational cannabis legalization in Canada on the medical marijuana market depends largely on 4 key variables:

  1. Pricing
  2. Taxation
  3. Accessibility to Specific Strains
  4. Product Availability

As time progresses the impact of these variables will become more defined. 

Medical Marijuana does not have a Drug Identification number (DIN) from Health Canada which means it is not eligible under the prescription drug benefit of group benefit plans.  That said, medical marijuana is eligible under Health Care Spending Accounts according to CRA. 


Any licensed physicians can prescribe MM including nurse practitioners in Ontario.  A diagnosis or reason for use is not required for a prescription. 

There are two main Cannabinoids in cannabis: THC and CBD

Tetrahydrocannabinol (THC):
-    Main psychoactive component – many of the physical and psychotropic effects.
-    Effective for pain, spasms, nausea
-    Levels of THC can vary widely among strains

Cannabidiol (CBD)
-    Non-psychoactive, can be synergistic or antagonistic to THC effects depending on dose and ratio.
-    Anti-inflammatory, analgesic, anti-emetic, anxiolytic and anti-convulsant properties

MM is currently being used for the treatment of dozens of medical conditions, based largely on anecdotal evidence.  There is no evidence indicating that MM is a first line treatment for any condition.  That said, the most substantial evidence supports MM use for the following conditions:

  1. Chronic Pain
  2. Chemotherapy-Induced Nausea and Vomiting
  3. Spasticity Symptoms in Multiple Sclerosis

It’s important to understand:

  • MM consists of dozens of dosage forms and strains
  • Dosing is highly individualized and requires gradual dose escalation
  • Equivalency factors can vary between Licensed Producers

Estimated Annual costs

Using a price of $8 - $9 per gram for dried cannabis, annual costs at varying doses could be approximately $5,840 - $6,570 based on 2 grams/day.  However, newer dosage forms (extracts, high concentration CBD, gel caps, etc.) could have higher costs.  Using a price of $20 per gram for CBD oils annual costs could be approximately $14,600.  The main problem is that the prescription only has to state the prescribed amount of grams per day.  It’s up to the patient to determine if they purchase dried cannabis or CBD oils, meaning the costs are highly variable based on patient choice and conditions. 

Coverage Considerations

Should plan sponsors want to include coverage for MM, several parameters should be carefully considered:

  • Financial position of current plan today.  (Where will costs be in 12 – 36 months?)
  • Analysis of claims data (disease state profile) can determine claims risk.  E.g. Chronic nerve pain
  • Core EHC coverage vs. HCSA
  • Evidence-based Prior authorization (under core EHC) with objective clinical oversight
  • Eligible medical conditions
  • Clinical criteria for coverage
  • Limiting coverage to members who have failed previous therapies
  • Multiple levels of coverage based on safety sensitivity
  • Financial limits (annual maximums, cost per gram limits, dosage limits) 

Coverage limitations are strongly recommended.  As an example, the Veteran Affairs plan had unlimited MM coverage and saw MM paid claims increase from approximately $409,000 to $20,500,000+ in three years.  In May 2017, the plan was amended to include maximums of 3 grams per day and $8.50 per gram. 

Coverage Examples

Below are a few examples of Canadian programs who recently added coverage for MM:

  • Loblaws / Shoppers Drug Mart employees are covered to a maximum of $1,500 annually, however only for specific medical conditions that must be authorized by the insurer: spasticity and neuropathic pain associated with multiple sclerosis, and nausea and vomiting in cancer patients undergoing chemotherapy.
  • Ontario Public Service Employees Union (OPSEU) announced the addition of medical marijuana to their benefits plan on June 15, 2017, with a $3,000 annual maximum. There are no medical condition limitations.
  • In an effort to reduce opioid use and addiction, an Ontario construction union, LIUNA Local 625, extended coverage for medical cannabis to its retired, disabled workers and dependents.

Insurance Carrier Access

To date, the following carriers have announced they will be including more options for MM in their group benefit plans:

Green Shield will offer more coverage options for MM than what is currently available through Health Care Spending Accounts.  Benefit maximums will be put in place and prior authorization will be required.  Coverage will only be available for chronic neuropathic pain, spasticity due to multiple sclerosis and nausea and vomiting caused by cancer chemotherapy. 

Sun Life will provide MM coverage at the request of plan sponsors.  Coverage will include yearly maximums ranging from $1,500 to $6,000.  A prior approval process and condition eligibility criteria will be required.  Initially, coverage will only be available to plan members for specific conditions and symptoms, including: cancer pain or nausea and vomiting associated with cancer treatments; pain or spasticity associated with multiple sclerosis; rheumatoid arthritis with pain that hasn’t responded to standard therapy; neuropathic pain or anorexia related to HIV/AIDS; and patients requiring palliative care.

For more information regarding medical marijuana and how it may impact your benefit plan contact Benefit Consultants Inc. at or call 1.800.667.2973


Medical Marijuana: Coverage Considerations for Canadian Plan Sponsors; Michael Sullivan, Co-Founder and CEO, Cubic Health Inc.