Product liability insurance is an important, yet often overlooked, insurance coverage for cannabis dispensaries.
I’ve talked to a number of business owners who didn’t initially worry about product liability because they were “just reselling a brand’s product.”
This kind of thinking isn’t just wrong, it could be really disastrous for a dispensary business if they ever get dragged into a lawsuit (defense costs are exorbitant in today’s environment).
As a dispensary owner, your commercial general liability (CGL) insurance policy is the first line of coverage to protect against claims involving bodily injury, personal injury and property damage that occur on your business’s premises. However, as comprehensive as a CGL policy is, it doesn’t cover every risk your dispensary may be up against.
Simply put, product liability insurance provides protection for liability claims brought against your business for the products you sell, in addition to risks that may occur off-premises.
You may be thinking that once a product leaves your dispensary, you are no longer responsible for issues that may arise, and that any liability will fall on the grower/manufacturer. However, just as with any other business selling products that consumers eat, drink, smoke (or vape), changes in the quality of products can occur that you could be held responsible for.
For example, if products that come into your dispensary are not handled or stored properly, they may become contaminated with bacteria, mold or other toxins that could cause a serious illness. There is also the potential for incidents in which consumers become ill after ingesting products that are mislabeled or haven’t undergone proper testing by the manufacturer.
And don’t forget about the budtender who unknowingly gives a customer incorrect dosing advice that causes a harmful reaction or interaction with other substances.
From a simple allergic reaction to a serious illness or death, it’s not uncommon to see a product liability lawsuit brought against a cannabis grower/manufacturer by a consumer who also decides to sue the dispensary that sold him or her the product.
Having product liability insurance can provide financial protection to help cover the costs to settle a claim brought against your dispensary, as well as the associated legal costs.
About the Author
Corey Tobin is an NCRMA Appointed Broker and Senior Vice President of Bolton & Company, one of the nation’s largest employee-owned insurance brokers. As a cannabis industry specialist, he can help you stay informed on key coverages to protect your dispensary. If you have any questions related to your coverage, please contact Corey Tobin at ctobin@boltonco.com or 626-703-1556.
