Hawaii’s largest workers’ compensation insurer is canceling insurance policies for seven medical marijuana dispensaries preparing to open this summer, citing concerns over criminal liability since the drug is considered illegal by the federal government.

Hawaii Employers’ Mutual Insurance Co., known as HEMIC, notified the affected dispensaries today that its policies will be canceled in 30 days and that premiums would be refunded. The company said its board of directors unanimously agreed to the decision after two independent legal opinions determined HEMIC would have “potential exposure for criminal liability” based on federal law.

HEMIC officials declined to identify the seven companies or how much they will be refunded. HEMIC does not cover Hawaii’s eighth marijuana dispensary.

The move could delay the opening of Hawaii’s first dispensaries, three of which have already harvested plants and are ready to begin sales, unless the companies can find an insurer willing to offer workers’ compensation policies. Hawaii law requires companies to provide workers’ compensation insurance that covers medical expenses and loss income for employees who are injured on the job. It also protects businesses from lawsuits by injured workers due to workplace conditions.

“Due to state and federal vagaries surrounding this new business at the time these applications were initially submitted to us, workers’ compensation policies were issued to these businesses in the normal course of insurance operations,” Marty Welch, HEMIC chief executive officer, said in a news release. “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.”

“We’re not providing an opinion or moral judgment on someone’s use of marijuana or not, and we’re certainly not taking a position opposed to the value of medicinal marijuana to treat certain medical conditions or chronic pain,” Welch told the Honolulu Star-Advertiser today. “This was really simply a legal decision.” The board had to ensure that the company, its employees, its balance sheet and its 6,500 customers were protected, he added.

HEMIC accepted workers’ compensation insurance applications starting in 2016 after the state’s first medical marijuana licenses were issued to eight dispensaries, but said under state law, it can decline to insure “businesses engaged in illegal activities.”

“A strict interpretation of the conflicting state and federal laws would expose companies doing business with medical marijuana dispensaries to criminal prosecution under federal law,” the company said. “This may include the personal assets of the members of its boards.”

HEMIC, a private mutual insurance company whose directors are elected by its policyholders, said it has a “fiduciary duty to act in the best interest of the company, its stakeholders and its 6,500-plus policyholders.”

Hawaii legalized medical cannabis in 2000, but patients had no legal way to obtain the drug. There are more than 16,000 patients registered with the state. Act 241, passed in 2015, allowed the state to issue eight licenses, with each permitted to open two production centers and two dispensaries. Dispensaries were approved to open as early as July 15, 2016.