Why Cannabis Businesses Need Product Liability Insurance
For any business producing, selling or marketing a product the risk for something to go wrong is always there. Yet, for those in the Cannabis industry, the risk can be even higher.
As the business of Cannabis changes and grows, the need for protection for those in the industry grows too. While many states are moving towards legalization. On a federal level, Marijuana is still a schedule one drug. This makes it difficult for the owners and managers of cannabis and hemp cultivation businesses, retail dispensaries, cannabis extractors, and laboratories to seek protection from risks plaguing the industry through insurance. One of the most significant risks stems from product liability claims.
Product Liability Risks in the Cannabis Industry
A standard General Liability policy has exclusions in place for Schedule 1 substances. Yet, the insurance industry is aware of the possible rise in the number and dollar amount of cannabis-related Product Liability claims and lawsuits. Most of these lawsuits stem from the growth in the production, distribution, and sale of edible marijuana products. The problem lies within the lack of understanding many customers have about the strength of edibles. Many consumers are clueless to the fact that edible cannabis can take much longer to affect them than other consumption methods. Meaning many first-timers consume too much of it.
Society holds all product manufacturers liable for placing dangerous products on the market. But there has yet to be a determination on what is “unreasonably dangerous” within the marijuana industry. Since the federal ban on all forms of cannabis is still in place. There is a lack of long-term studies on the safe and practical uses of cannabis.
Unfortunately, there are not currently clear warning or labeling regulations in place to stop consumers from taking too much. While strides are being taken every day to ease the problem. Due to legalities associated, it is slow going. Which is why it is a must to secure cannabis or hemp insurance.
Keep in mind these are not the only product liability risks associated with the marijuana industry. Other hazards include:
Problems that arise from the presence of fungus or pesticide.
Retailers held liable to an injured consumer claiming intentional misrepresentation. A claim of breach of a warranty, or negligence.
In states where marijuana is legal, there are propositions that those involved in the cannabis industry carry Product Liability insurance. These types of regulation would provide security for cannabis-related businesses.
Cannabis Insurance Designed for Those in the “Biz”
A Commercial General Liability insurance policy isn’t enough protection for the cannabis business owner. Due to their exclusions for a schedule one substance, other banned substances and ingredients deemed a health hazard. Luckily, there are a handful of carriers writing CGL policies. That will provide adequate Product Liability coverage for the cannabis industry.
As with any business, it is imperative that your cannabis-related enterprise has enough insurance coverage to protect against catastrophic events and accidents. Due to the fact the products you are growing, or selling are still illegal on a federal level. Traditional insurance carriers do not offer much mainstream protection. It is important to choose an insurance provider that understands the unique needs of your business. As well as having the necessary expertise to ensure that the right type of coverage is placed for your cannabis-related business.