Product liability for cannabis is a form of risk mitigation cannabis business owners should all consider. Each state has varying laws regarding product liability, but it typically holds manufacturers and retailers alike accountable for issues that arise. Typically these cases cite strict liability, negligence, misrepresentation of theories, and/or express or implied warranties. The purpose of this level of inclusion is to place pressure on retailers to ensure manufacturers are using the highest quality products. Product liability for cannabis is most relevant for marijuana infused products such as edibles or beverages where illness post ingestion is possible. Cannabis business owners such as dispensaries should keep in mind that product liability cases are some of the most expensive cases for a business to face.
One of the first steps in protecting against product liability is adequate documentation. Retailers should look to label their products with detailed information very similar to the way pharmaceutical prescriptions are labeled. Labels should include information such as content description, potency, issue date, instructions for use and storage and expiration an date. The label should also include the common sense warnings such as “avoid eye contact,” “keep away from children” and “do not use while operating a vehicle”.
It may be a surprise that it’s not just the growers and manufacturers who are held liable for defective products – retailers are also at risk. If a consumer purchases a defective product from a retailer and becomes ill, that dispensary owner can be held liable, even if there was no prior knowledge of defects in the product. The rationale behind imposing liability on dispensary owners is that it will pressure them to vet manufacturers they do business with more carefully and only work with businesses that have a proven track record of making high quality, safe products. While states tend to favor those who had no part in the manufacturing of a defective product, there is still risk of liability.
Cannabis business owners should implement the product life cycle concept strategy to help evaluate product liability. The product life cycle applies biological knowledge to production processes. The product life cycle focuses on introduction, growth, maturity and decline phases. By treating each part of the product’s life as an individual stage (pre-production, production, and post production), businesses can more easily identify sources of liability and address these concerns in their specific stage of the process.
Another area where cannabis business owners can help themselves is product testing. Retailers should be using manufacturers that use third party testing for all batches. Testing should be checking for quality and verifying that the product is free of contaminants such as molds or pesticides. After testing, small samples of tested batches should be available in case a controlled sample is requested at any point. Coupled with testing, product tracking should also be used in order to easily identify a specific lot in case of a product recall. As a cannabis insurance company we look to provide the cannabis industry with the necessary information to mitigate risk and help your cannabis business succeed.