Cannabis & Hemp Product Liability Insurance

Product Liability Insurance is a common and well-known necessity for many entrepreneurs. For business owners in the cannabis and hemp products industries, this coverage takes on added significance. While not exactly a new product, cannabis and hemp as legal product offerings are still in their infancy. Predicting how consumers will react to problems, issues and negative experiences with these products is tricky. But, the history of products liability law and its hundreds of thousands of lawsuits and class action suits offers some insight.

Defective Products Law Overview

This area of law covers the damage that consumers experience due to the use of pharmaceuticals, machines, tools, food items and other products. Manufacturers and professionals in the supply chain are legally responsible for providing safe products. There are three main areas of exposure in these claims:

  • Design Defects: The product is manufactured as designed, but a flaw in that initial design causes harm.
  • Manufacturing Defects: The design may be sound, but something goes wrong in the manufacturing or fabrication process that results in a faulty product and these mistakes lead to illness or injury.
  • Failure to Warn/Marketing Defects: Labeling, warnings and instructions are often necessary to ensure safe use of a product. When the warnings are absent, insufficient, or misleading and injury or harm is the result, a defective products claim may be warranted.

In many cases, a combination of two or all three of these theories of liability may be indicated in a defective products claim. Ensuing litigation can ruin a business.

Where Will the Focus Be for Cannabis and Hemp Defective Products Claims?

The cannabis and hemp industries produce and sell products and they are subject to products liability law. Different industries apply differing protections, rules, and regulations to protect consumers from defects. Many professionals presume that the cannabis and hemp industries compare most closely to the alcohol and tobacco industry in defective product claims. But others argue that the area these entrepreneurs should be following more closely is pharmaceuticals.

Only time will tell which legal scenario plays out. But one thing is certain, products liability attorneys will chase the money. They are most likely to build these types of claims following the path that sees the most return.

Potential Risks

Colorado cannabis product recall made waves in the industry late in 2015 due to the use of banned pesticides in cannabis-infused edibles. It was a huge recall, but not an isolated event. The use of pesticides on products that are designed to be ingested leaves the industry open to product liability risks, potentially under all three defective products theories of liability.

Another specifically vulnerable area is labeling. Each state that has legalized marijuana use creates its own legislation for minimum labeling and marketing rules and regulations. With no uniform nationwide standards, compliance is challenging. This issue is further complicated by ever-changing laws, as states and their legislatures respond to evolving information and standards for the industry. Savvy products liability lawyers are likely to use state consumer protection laws to file lawsuits when their clients have suffered injury or illness due to cannabis and hemp product use.

These are just two examples of the many risks of providing cannabis and hemp products to the public in a new and evolving field, but they highlight the need for protection from legal action when something goes wrong. That is the essential role that product liability insurance plays in this industry.

Preparing for the Inevitable

With the expansion of the legalization of medical and recreational marijuana throughout the United States, it’s only a matter of time before lawsuits against manufacturers and suppliers start growing. Businesses in the cannabis and hemp industries must protect themselves, and product liability insurance should be their first line of defense.

Every cannabis business is unique– we tailor our coverage to fit your specific industry segment and need. Call or submit a Insurance Quote Request

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Las Vegas, NV 89135