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Cannabis Product Liability Threatens Cannabis Industry

The United States market share in the cannabis industry is currently estimated to be near $6.3 billion with double digit annual compound growth as marijuana is legalized across the globe. While the industry is undoubtedly growing, investors and cannabis business owners need to be cautious according to Fortune Magazine, Nov. 7, 2017. What should and does have business owners concerned is cannabis product liability. A better way to state the issue is, what will the cannabis business owner be required to pay for, if a product they produce or sell is found to be defective? As the industry grows, the profits grow, the risks grow as well. As production increases and the regulations adjust to cannabis legalization, the pool of risk only expands for the marijuana business owner.

S2S Insurance, cannabis business product liability, who insures cannabis business, marijuana

Due to cannabis’s Schedule 1 designation by the DEA, even more is at risk. The Comprehensive Drug Abuse Prevention and Control Act of 1970 prohibits the manufacturing of marijuana, distribution, dispensation and possession and lists the plant next to heroin as a Schedule 1 controlled substance having “a high potential for abuse,” 21 U.S.C. Sections 801, Et. Seq (1970) (Controlled Substance Act). Thus, claims may be brought against anyone in the marijuana industry’s supply chain touching the item prior to sale to the consumer; i.e., anyone planting, cultivating, harvesting, processing/extracting, testing, packaging, disposing, transporting and dispensing marijuana.

Officials said they are investigating the possibility of food-borne illnesses stemming from the restaurant in the suburb of Columbus, but have not pinpointed the source of the problem. Results from test were pending, the health department said.

The restaurant was shut down on Monday after an investigation was launched, but it’s expected to reopen Tuesday afternoon.

“Our protocols identified a handful of illness reports at one restaurant in Powell. … We acted quickly and closed this single restaurant out of an abundance of caution and we are working with the local health officials to reopen this restaurant as soon as possible,” said Laurie Schalow, a spokeswoman for Chipotle.

S2S Insurance, cannabis product liability, marijuana insurance, dispensary insurance

Every year defective products cause bodily harm, property damage, production stoppages. The process of defending litigation or even coming up with a settlement agreement can completely drain a company’s resources. When dealing with cannabis product liability suits, businesses will also have to deal with regulatory compliance, producing and distributing product warnings, recalling products, claim investigation, product testing and additional risk assessment. Where there is a cannabis product liability suit there will be attorneys, experts, and possibly consultants that can all get very expensive very quickly. Lawsuits can range from a single plaintiff seeking damages for personal injuries to class action law suits where a defective product is tied to an entire group of claimants. Even the most standard cannabis product liability claim could financially crush any cannabis business owner that is not prepared with the proper risk management strategy. At S2S Insurance we have a team of professionals ready to help develop a risk management strategy for your marijuana related business. All policies are subject to claim limits and it is critical that business owners review their policy with not only their agent, but also a licensed attorney.

read more at abcnews.go.com

Cannabis Testing is Not An Exact Science

As the interest in legal cannabis grows, government agencies and consumers alike will want to know what they are consuming. Cannabis testing of products is becoming a standard in all states that legalize medicinal use or recreational use marijuana. The standards for this testing vary state to state. In some states cannabis testing is carried out similarly to that of pharmaceuticals. Some states are testing for purity, contaminants, and potency, while others are testing for only 2 or 1 of those elements.

Why Cannabis Testing Labs Need Insurance, medical marijuana, adult-use marijuana

Cannabis Testing varies from state to state

The cannabis industry has looked to the federal level for guidance on cannabis testing, but have received no help from federal agencies. Cannabis carries a schedule I designation under the Controlled Substances Act, designated by the DEA thus making it an illegal drug. Because of the illegality of marijuana federal agencies refuse to issue any standards regarding cannabis testing or any other form of regulation dealing with the drug. The federal government has taken a hard stance that even with states legalizing both medical and recreations use of the plant, federally these agencies see the drugs as an illegal substance. The federal government’s stance on the issue leaves states to individual mandate testing as they see appropriate for their states and consumers.

State regulators have had no guidance from the federal agencies that usually set health and safety standards for agriculture, food and medicine because the federal government considers marijuana to be illegal. They have been hampered by the fact that there’s little research on how marijuana tainted with potential toxins affects humans, partly because the federal government funds limited marijuana research. And they’ve also had to adjust testing regulations to reflect the costs and amount of tests fledgling legal marijuana markets can handle.

In Oregon, for instance, initial rules rolled out in October 2016 for marijuana testing and laboratory accreditation contributed to backlogs at laboratories and shortages of product on dispensary shelves. Regulators, seeking to ease the pressure on the market, issued new rules that December that reduced the number of times a harvest, or a batch of chocolates or candies, would have to be tested.

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Cannabis testing helps to protect the cannabis business owner

As insurance specialists, we at S2S Insurance want to provide cannabis business owners with the necessary information to make wise decisions that will impact the success of their business. We would tell all businesses owners to become aware of the requirements in their particular state regarding testing. Understanding the regulations in your state early in the business planning process can help a business owner begin to estimate costs. Laboratory testing of any kind is never inexpensive and cannabis testing is no different. Cannabis business owners should not overlook this requirement if it is a state mandate. Business owners should also be aware of the risks that are associated with cannabis testing and protect themselves. While cannabis testing is meant to protect the end consumer mistakes are made. Testing is complicated and requires the upmost attention to detail which creates room for error. The margin for error increases as the requirements become more stringent. Business owners should be protect themselves with product liability insurance that can help mitigate risk in case of issues of recalls, production stoppages, and law suits.

read more at post-gazette.com

Understanding Insurance for Cannabis Businesses with S2S Insurance Specialists

Source: The National Marijuana News

Eric Rahn of S2S Explains How Cannabis Companies Can Mitigate Their Risk Despite Schedule 1 Status

TNMNews had the opportunity to meet with and interview Eric Rahn of S2S Insurance Specialists at the Phoenix Park Hotel for the NCIA Lobby Days event in Washington D.C.. Mr. Rahn is a member of the NCIA and joined the cannabis industry three years ago identifying a great need for risk mitigation within the sector. We were fortunate that we were able to interview Mr. Rahn first during the event as his obvious experience and knowledge set an excellent tone for the event and let us know what to expect from the professionals we would be speaking with.

What is only growing faster than the Cannabis Industry? If you said risk, you are spot on. Eric Rahn started his career in the casino gaming industry becoming very familiar with working within a regulated industries. Seeing the rapid growth of the cannabis sector he decided that their was a void of qualified international insurance brokers in this emerging sector. After identifying that many cannabis companies, both Public and Private associated within the cannabis industry were facing unmitigated in securing the proper insurance risk due to the Schedule 1 status of cannabis. He not only felt he had the knowledge and experience to help, but also that the movement needed all the help it could get to push the legalization movement forward. He then made the transition into the cannabis industry by establishing S2S Insurance Specialists and joining the NCIA.

As you listen to the interview, you will hear that he has adopted the seed-to-sale concept of tracking cannabis businesses from the planting of the seed to the ultimate sale of the product. By examining the industry in this manner he was able to identify the unique risks associated with each business. Hence the name of his company, S2S Insurance Specialists. He has identified the four major areas of risk the cannabis industry faces as banking, the IRS tax code 280E, interstate transportation and of course a lack of liability insurance. His number one suggestion is that a cannabis company makes sure it is speaking with a certified insurance broker that is familiar with the cannabis industry and its unique risks, as many brokers are not yet educated on this particular subject matter.

Mr. Rahn suggest any company raising money, bringing in outside investors or trading on a stock exchange acquire Directors and Officers Liability. Also any company selling cannabis products should consider Product Liability Insurance. There may be a lot of confusion surrounding how cannabis business owners can mitigate their risks due to the Schedule 1 status of cannabis, however solutions are out there. Cannabis entrepreneurs simply need to make well informed decisions.

We want to thank Eric Rahn for taking the time with us to address questions and provide this much needed information concerning the liability of owning a business in the cannabis sector. If you would care to reach out to Mr. Rahn and S2S Insurance Specialists, please go to S2SInsure.com or you can reach them at their various offices listed below.

Boca Raton (954) 790-6604
Coconut Grove (305)-442-1500
Denver (720)-726-6147