Why Cannabis Operators Need Suitable Product Liability InsuranceIncorrect doses and mislabeling of cannabis may lead to injury, mental distress, and even death. Recent lawsuits have shown that cannabis operators need cannabis product liability insurance. However, not all product liability policies provide suitable coverage for cannabis-related risks.
Cannabis Poisoning Is on the Rise
Research published in the New England Journal of Medicine has linked edible cannabis legalization with unintentional cannabis poisonings among children. According to a research letter published in JAMA Internal Medicine, cannabis poisoning has also increased among older adults since the legalization of marijuana. The largest increases in emergency department visits occurred after edible cannabis became available for retail sale.
The CDC says cannabis edibles have different risks than smoked cannabis. Edibles may take up to two hours to produce intoxicating effects, which may lead to overconsumption and poisoning. Additionally, the effects may last longer than expected and be unpredictable. In some cases, consumption may occur accidentally – especially among children, because many edibles have packaging that appeals to children and looks similar to the packaging of well-known snacks and candies.
According to the CDC, children may become very sick and have trouble breathing after consuming cannabis. NBC News says a four-year-old boy died after eating gummies containing THC. Previously, two children were hospitalized after eating THC-laced candy provided by a food bank and another incident saw at least five children taken to the hospital after a boy shared marijuana-laced candy at school. Some medical experts have also linked the death of an 11-month-old boy who died from myocarditis to cannabis.
Cannabis Product Liability Claims Are Infrequent But Severe
As Wilson Elser explains, cannabis product liability is an evolving area of law. As legal cannabis is relatively new, lawsuits are still testing what is “unreasonably dangerous” in terms of product liability. Lawsuits have also accused cannabis companies of exploiting the belief that cannabis is safe and healthy despite known side effects.
Although product liability claims against cannabis companies are infrequent, when they do occur, they are often severe. Furthermore, all the companies connected to the cannabis product may be liable.
Insurance Journal reports that the parents of a woman who died after reportedly consuming a cannabis edible filed a lawsuit against the companies involved in the design, manufacture, distribution, and sale of the product. The woman allegedly experienced psychological and physiological symptoms after consuming an edible and died within hours.
Policy Exclusions May Leave Cannabis Companies Exposed
The National Institute on Drug Abuse reports that marijuana use may result in a range of effects, including impaired body movement, difficulty thinking, impaired memory, hallucinations, delusions, and psychosis. Marijuana use may also be dangerous when combined with driving – the NHTSA says marijuana slows reaction times, impairs a person’s ability to judge distance, and reduces coordination. These effects may lead to serious mental or physical injury, and injuries may result in lawsuits.
Product liability insurance can shield cannabis companies from lawsuits alleging defects or labeling issues that result in harm to consumers. However, common exclusions leave cannabis companies exposed. For example, many carriers use health hazard exclusions that limit coverage for medical conditions resulting from use of the product in question. These exclusions take different forms, some being more restrictive than others.
If your policy excludes claims involving diseases or mental illnesses caused by your product, you may not have any coverage if faced with a lawsuit. Although the coverage may be cheap, it is not good value if it does not provide the protection you need. Excluding mental illness and diseases from coverage for a psychoactive product is comparable to excluding fire on a property policy for a frame building: it makes the coverage virtually useless. No agent who truly understands the market should be recommending such coverage.
At Heffernan Insurance Brokers, we have developed insurance coverage for the cannabis industry. We offer cannabis product liability insurance as well as other policy types designed to protect businesses involved in the production and sale of cannabis. Learn more.
