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

18 October 2017 / Category: Blog
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Here at Cover Cannabis we are asked 100’s of questions every month about how to properly insure a cannabis operation. Here is a question we received recently:

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: We are glad you brought this up. Product Liability in the Cannabis world is an evolving and complicated topic. The answer to your question becomes then more complicated, because it varies per state. In about half of the states where marijuana can be sold for medical and/or recreational use, a retailer who sells a defective product to a consumer can be subject to liability in the event the consumer is harmed. This would mean, in your specific situation, if you sell a defective edible to a consumer, you could be liable even if you were not involved in the manufacturing of the product. In the other half of the states, retailers are not completely off the hook, in the event of a tainted product. Retailers can still be liable if they provided misleading information about the product or if a judgement against a manufacturer is not enforceable. Either way, you can still be liable as a retailer for a product you did not manufacture.

Currently cannabis product liability cases are far and few in between, but as you mentioned there are open cases in court now. In 2015 a class action lawsuit was filed against a company for treating product with a fungicide that emits cyanide gas. Another case, a wrongful death case, in which three children are suing after their father killed their mother while under the influence of marijuana, in this instance the plaintiffs are suing both the manufacturer and the retailer. And more recently one of the first instances of a marijuana product recall in Oregon. We expect these cases to grow as the cannabis business expands. Furthermore, we see it becoming more and more problematic as the cannabis industry is not regulated on a federal level and individual states are creating their own legislation and guidelines. Without formal testing, packaging and safety standards in place operators of all cannabis businesses are an easy target for lawsuits.

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.