Cannabis Testing Facility Concerns Prevent Sales

who insures the cannabis industry, testing lab insurance, liability insurance for marijuanaAs more states legalize marijuana for medicinal and recreational purposes, safety of  the product will become more of a concern. States like Michigan are tackling the issue of safety head on by requiring cannabis products be tested by a licensed cannabis testing facility before hitting the open market. The use of a licensed cannabis testing facility is a move to protect consumers from potentially harmful products that could have impurities or concentration levels that are too high, or even too low. This requirement of using a cannabis testing facility creates a level of accountability for cannabis businesses in the medical marijuana industry in the state of Michigan.

The state of Michigan is facing a dilemma with their medical marijuana requirements because the cannabis testing facilities available to test cannabis products have not obtained licenses. With no licensed cannabis testing facilities available in the state, other businesses that will transport and provide cannabis to patients are unable to legally operate. Michigan’s system for legalized medical marijuana relies on the ability to have all products tested at a licensed cannabis testing facility, and if products have not been tested, they cannot be distributed.

However, a key step in the state’s new system — a safety compliance facility where medicinal marijuana would be tested — has not yet been licensed in Michigan.

“Since none of those have been licensed yet, there can’t be a complete system yet,” Harns said.

That means none of the newly licensed operators can legally provide medicine to patients under the new system.
Operators approved for new licenses can wait to pay the $48,000 fee that would make their new license active, and can continue to operate under the second set of emergency rules the state put in place in May, Harns said. However, once an operator pays the $48,000 fee to make the license active, they’ll have to comply by the new medical marijuana rules, Harns said. That means they can’t distribute product to medical patients until their products have been sent to a licensed testing lab to ensure safety of the product.

Cannabis testing facilities in the state of Michigan carry a great deal of responsibility for the entire medical marijuana industry in that particular state. As a business owner of a cannabis testing facility that is relied upon to supply a form of medicine to patients, it is critical that a risk management plan is set in place. Cannabis testing is complex and presents the possibility for errors. Errors in testing can lead to a halt in operations, recalls, and law suits. If a cannabis testing facility makes a mistake it can cost the owner of that facility large sums of money to resolve.

marijuana business, cannabis recommendations, insurance for cannabisBusiness owners should look to mitigate risk by working with a knowledgeable insurance company that can help guide them through the process of choosing the best insurance policy. A good insurance policy can help protect a cannabis business owner from financial losses due to errors, mistakes and issues in compliance. Without a well thought out risk management plan marijuana business owners could be facing financial losses which include fines from the state, revenue loss due to work stoppage and possible legal fees. It is also important to remember that regardless of what type of cannabis insurance policy you have, coverage limits will apply.  You must read your policy with both your agent and your attorney to determine what your coverage consists of.


Product Liability For Cannabis Products Explained

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”.

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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.