Canada: Legalization Of Cannabis: Upping The Risk Factor

Cannabis is legal in Canada today. Insurers must be mindful of how the new legislation will impact certain policies. In this article I will review the legislative changes and some of the implications for home and auto insurance.

The Legislation

Today in B.C. the Cannabis Control and Licensing Act, SBC 2018 c 29 ("CCLA") establishes the following:

  • A cannabis retail licensing regime similar to the current licensing regime for liquor
  • Anyone 19 or older can purchase sell or consume cannabis;
  • Adults can possess up to 30 grams of cannabis in a public place;
  • Adults can grow up to four cannabis plants per household (the plants must not be visible from public spaces off the property, and home cultivation will be banned in day-cares); and
  • Amendments to the Residential Tenancy Act and Manufactured Home Park Tenancy Act to provide that:

    • tenancy agreements entered into before the CCLA comes into force that contain a term that prohibits smoking tobacco on the property are deemed to include a term that prohibits smoking cannabis
    • tenancy agreements entered into before the CCLA comes into force are deemed to contain a term prohibiting the growing of cannabis.

As a result of the CCLA provisions, amendments have been made to B.C.'s motor vehicle legislation, including:

  • implementation of a 90-day Administrative Driving Prohibition for any driver whom police reasonably believe operated a motor vehicle while affected by a drug or by a combination of a drug and alcohol, based on analysis of a bodily substance or an evaluation by a specially trained police drug recognition expert;
  • New drivers in the Graduated Licensing Program will be subject to a zero-tolerance restriction for the presence of THC; and
  • Police are allowed to serve a notice of licence suspension if:

    • the officer has reasonable grounds to believe that the driver has a prescribed drug in his or her body as a result of the officer's evaluation of the driver and/or an analysis by approved drug screening equipment,
    • the driver fails or refuses, without reasonable excuse, to comply with a demand to be tested by approved drug screening equipment, and
    • because the driver has a blood drug concentration equal to or exceeding a prescribed blood drug concentration level within 2 hours of operating a motor vehicle, or a combination of blood drug and alcohol concentrations exceeding the prescribed combination level.

Home Insurance

Many home insurance policies contain exclusions based on possession, use and manufacture of illegal substances or substances within the Controlled Drug and Substances Act, ("CDSA"). Cannabis will no longer be classified as an illegal substance and it will be removed as a controlled substance under the CDSA. Insurers may wish to amend policy exclusions to expressly reference possession, use and manufacture of cannabis. Insurers should also consider that the "no illegal acts" exclusion will no longer apply to possession, use and manufacture of cannabis within the CCLA allowable limits. This is particularly important for policies issued to landlords and strata corporations. From the insurers perspective, tenancy agreements and bylaws entered into or taking effect after today should expressly prohibit growing or using cannabis on the property.

Other considerations for insurers include whether the legal act of growing cannabis in a house could be the basis for a "material change to risk". Growing cannabis in the home creates higher risk of damage due to fire, moisture, mould, electrical failure, and theft. For instance, in Davidson v Wawanesa Insurance Co., 2015 BCSC 1383 it was found that the presence of a cannabis grow operation was a change material to the risk under the policy. Would growing a legal amount of cannabis still be a material change in risk in light of today's changes?

Further, insurers should consider amendments to specifically address how they intend to treat cannabis plants for the purpose of theft or damage claims. Will cannabis plants be considered to be personal property, or will claims for plant theft and damage fall under the "tree, shrub and plant" portions of the policy, which generally include a maximum payout per loss?


Recreational use of cannabis is likely to increase with legalization. Auto insurers like BCCA have been airing commercial for many months now warning of the risk of driving high. Amendments under the Motor Vehicle Amendment Act, SBC 2018 c 18 ("MVAA") provide substantially similar treatment for driving while impaired under the influence of cannabis as for driving while under the influence of alcohol.

The major issues with enforcement of these measures is the lack of reliability of roadside testing equipment. Currently, police check for drug impairment by way of a field sobriety test (standing on one foot, walking a straight line). A saliva testing device has recently been approved by the Attorney General with a tool to detect recent drug use (within about 6 hours). A failed test would then give police reasonable grounds to bring a driver in for further testing, including a blood test. There are concerns though over the efficacy of the test and there will almost certainly be constitutional challenges to the test results.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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