U.S. INSURERS RETHINKING PAYING MARIJUANA LOSSES

LOS ANGELES (Reuters) - A Supreme court ruling that federal drug laws
prohibit distribution of marijuana may be just what the doctor
ordered for California insurance companies sick of paying claims on
lost, stolen or confiscated pot.

People legally using marijuana for medicinal purposes in California
have been able to file claims with their insurance companies for
payments when the drug was lost, stolen or confiscated by police.

However while medicinal use of marijuana is legal in California under
a 1996 voter initiative, a U.S. Supreme Court decision last May
barring distribution of the drug has thrown into question the
validity of such insurance claims in California.

Insurers said Tuesday they are rethinking their policies regarding
claims and marijuana advocates are crying foul.

"In the last two years there have been four losses (of marijuana) in
California where we actually made a payment. We are in the process of
trying to figure out exactly what our position is going to be in the
future. We a ren't sure," said Bob Daniels, a spokesman for Allstate
Insurance, a unit of The Allstate Corporation

Elenore Williams, a spokeswoman for State Farm Insurance in Los
Angeles said that the company has seen "four or five" claims for lost
marijuana in the past few years, but she could not specify which of
the claims had been paid. She said that in light of the federal
ruling, State Farm "is not going to pay any future claims with regard
to medical marijuana."

Marijuana advocates, meanwhile, warned that insurers should be
cautious when investigating medicinal pot claims because refusing to
pay could open them up to litigation because it is still legal for a
patient to grow and use his own marijuana for medicinal purposes in
California.

The U.S. Supreme Court ruling does not invalidate medical marijuana
use in California, said Eric Shevin, an attorney and spokesman for
the Los Angeles chapter of the National Organization for the Reform
of Marijuana Laws. "The federal court was clear that it wasn't ruling
on individual patients who had a necessity" to grow their own, Shevin
said.