Wherever you fall in the cannabis manufacturing sphere, there are a variety of product liability concerns to consider. Edibles, vaporizers, pesticides, breaches of warranty, misrepresentation, label claims and deceptive practices all present a real risk of litigation, even for a cautious business. Appropriate insurance benefits will be there to help you through these challenges.
These risks can generally be broken into three main areas of risk:
Product contamination—In the event that a consumer experiences adverse health effects or illnesses after using cannabis, your company can be held liable. For those that sell edibles, customers can easily experience food poisoning or similar conditions from tainted products. For those that sell vaporizers or other smoking products, you could be sued following issues of contamination, product mislabelling and misrepresentation. What’s more, contaminated products can cause long-term health effects, increasing the cost to your business. Further complicating matters, in the event of an expensive recall and without the proper protections in place, your organization may be left without financial recourse.
First-party claims—First-party claims are common for nearly all organizations that sell goods or services. However, due to the mind-altering nature of cannabis, your business is particularly at risk. Product liability claims related to accidents, injuries, product defects and similar losses are increasingly common in the cannabis industry. And even just one claim can have a lasting impact on your bottom line.
Third-party claims—Third-party claims are particularly troubling, as your business can be held responsible for accidents even if you aren’t directly at fault. In the event that one of your customers gets into an accident, you may have to recoup the costs should they cause property damage or bodily injuries to a third party.
To properly address these risks and more, it’s critical that organizations not only produce high-quality and safe products, but secure the right insurance as well.