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Am I Liable for Cannabis Products I Don’t Manufacture?

24 November 2023 / Category: Blog
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Question: I have a dispensary and sell a variety of cannabis-infused products. Recently I’ve seen cases of retailers being involved in lawsuits that I had expected would deal only with manufacturers. As a dispensary, am I liable for issues with the products I sell, even if I am not the manufacturer of the product?

Answer:

As a dispensary, you may be liable for issues with the products you sell, even if you are not the manufacturer of the product. According to a source, product liability claims usually center on the manufacturer of an item. However, the seller will invite scrutiny when a defective product causes injury or property damage. The general rule is that as long as the seller has not had the opportunity to modify or otherwise tamper with the product as received from the manufacturer, the seller will not share in the manufacturer’s potential liability. This general rule has exceptions. For example, if the manufacturer and seller are the same entity, then the manufacturer cannot attempt to hide behind its “seller” status to avoid liability. Also, if the plaintiff’s claim is warranty-based or in situations when the manufacturer cannot be reached under the state’s long-arm jurisdiction, then the seller may also be exposed to liability for selling a defective product. Each product liability claim needs to be examined on its facts to properly identify the appropriate defendants if a lawsuit becomes necessary. It is advisable to consult with a legal professional to understand your legal rights and to pursue damages claims against all who may be legally responsible.

There have been recent liability cases related to cannabis in the US and California. For instance, in October 2022, two customers sued a California marijuana company, alleging that their prerolled joints were not as strong as claimed 1. In February 2023, a California federal judge ruled that legal cannabis patents asserted in a case were enforceable, rejecting a motion to dismiss based on the illegality doctrine 2. Additionally, two recent cases filed in Colorado and Nova Scotia represent the first attempts at class action product liability claims involving cannabis in their respective countries 3.

It is advisable to consult with a legal professional to understand your legal rights and to pursue damages claims against all who may be legally responsible 2.

We recommend being proactive and minimizing your risk by informing yourself of the testing being conducted by your suppliers/manufacturers, as well as getting to know your state regulations. Here at Cover Cannabis, we can help you protect your business in the event of an issue with the products your business cultivates, manufactures or sells.  Call us today and let’s explore your options.