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This article originally appeared in the June 2017 print edition of Cannabis Business Times. To subscribe, click here.
As the cannabis industry continues to expand, and standardization and acceptance continue to move forward, the risks associated with providing consumable products to a growing portion of the population will increase. In other words, more consumers purchasing cannabis products equals a greater risk for consumer claims. Cultivation operations should take the steps necessary to ensure they are adequately insured should a claim arise. Because of this, it’s critical that business owners take their time in selecting the most appropriate insurance coverage for their business. Not only is it smart for your business, but in some states, such as Washington, cultivators are required to purchase insurance (according to the state’s Office of the Insurance Commissioner).
In the days of unregulated sales and basement cultivation, mitigation of risk through insurance policies was the furthest thing from most cannabis cultivators’ minds. The very act of cultivation, distribution and sales was, in itself, a risky endeavor, and no policies existed to protect farmers from a no-knock raid. Things have changed dramatically in the past few years, as numerous U.S. states and Canada have legalized commercial cannabis cultivation and sale for recreational and/or medical purposes.
With seed-to-sale tracking being the standard for Cole memo compliance, it’s now possible for consumers to identify and trace their cannabis purchases back to the farm that cultivated it. This level of accountability, while great for consumers, places additional pressure on businesses to ensure they are covered in the event of an injury or claim.
In the past few years, several product liability and injury lawsuits have been brought against cannabis companies for pesticide usage, including LivWell, Inc., based out of Colorado, and most recently both Mettrum Ltd. and OrganiGram of Canada face similar suits. While decisions and settlements have not been reached in any of these cases (update: Livwell's case was dismissed early in 2016), there is no reason to believe that this is the end of class action and liability claims against cannabis companies. As cannabis businesses grow and increase their footprint in various states throughout the U.S., an increase in legal action against these businesses will likely follow. If they haven’t already, now is the time for cannabis cultivators to get their operations covered in order to protect their company and its assets.
To read the full article in Cannabis Business Times' June edition, click here.
Top photo: Ryan Lindberg
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