The above incident resulted in 13 nearly identical product liability lawsuits filed in
Cannabis products are being produced and distributed in an increasing number of forms while a growing variety of cannabis-infused foods and beverages are being marketed in growing number of states with legal recreational cannabis. The investigation is a reminder to those in the cannabis product supply chain―such as cultivators, processors, labs and dispensaries―that, due to their human use and consumption, cannabis products, like other consumer goods, must be manufactured and distributed in accordance with SOPs, protocols and standards intended to mitigate the risk of adverse health events. In addition, as with other consumer goods, having insurance for products liability claims is critically important for those producing and distributing cannabis products for human consumption.
The products liability claims described herein also depict a unique aspect of the cannabis market that, for the time being, makes such claims against the cannabis supply chain different than similar claims asserted for other consumer goods. Due to the federal prohibition of cannabis, products containing marijuana, which is still a Schedule I controlled substance, may not be distributed interstate. Such products are necessarily produced and sold in the same state under that state's cannabis laws and regulations. Thus, unlike a producer of a noncannabis consumer good, who may have products liability exposure for products distributed regionally or nationally and resultant exposure to mass tort and/or class action claims due to the broader impact of an alleged product defect, the intrastate nature of cannabis goods limits product liability exposure for the cannabis supply chain to a degree―as demonstrated by the recall of the just approximately 500
However, over the past few years there have been an increasing number of product liability and consumer fraud claims asserted in different states that allege that the mislabeling of the amount of THC or CBD in a product caused either a physical injury, such as an unanticipated high, or resulted in the product not providing the effect or benefit advertised in the packaging and labeling. Once the federal prohibition of cannabis ends, or other changes to the laws are made to allow for interstate distribution of cannabis products, exposure for cannabis-related products liability claims will increase in number and value, as such claims will likely pertain to products distributed regionally or nationally. Thus, participants in the cannabis supply chain should now be incorporating best practices and compliance measures into their businesses that will mitigate the risk of such exposure.
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