Stronger Strains? Ensure Your Cannabis Business has the Right Liability Insurance

April 30, 2021

As strains of marijuana grow more and more potent with consumer demand, it’s important to understand the potential liabilities your business may face if one of your patrons isn’t prepared for that stronger dose. 

Let’s start with some insurance basics—what happens when the high goes bad?

Your customer buys your latest and greatest strain and has a bad experience after they leave your store. Maybe they get sick, maybe they get so high they damage something or face some similar situation they blame on your product.

They could potentially file a first-party or third-party claim relating to bodily injury, property damage or other damages related to your producthttps://ncrma.net/wp-admin/post.php?post=262805&action=edit#edit_timestamp. How do you define first or third-party?

  • First-party—arising from an accident, injury, or loss caused by manufacturing defects, improper labeling, and failure to warn consumers about potential hazards (bad THC measurements, mold or the presence of carcinogens, as examples)
  • Third-party—any type of claim that could see a business held liable for damages that result from the use of a product (property damage, wage loss, legal and medical expenses, and bodily injury)

A study by Marijuana Business Daily reported that many consumers self-reported using cannabis products containing THC levels greater than 30 percent—though some claims refute this potency.  

Currently, most “top-shelf” cannabis strains seen on dispensary shelves circle around the 20 percent THC level. 

Companies that produce and sell medical marijuana to patients suffering from chronic pain issues are advertising these stronger strains to better differentiate themselves from competitors—and recreational users are taking note. 

From a cannabis business standpoint, it’s important to stay informed on the potential liabilities your establishment could face and ensure your products are regularly reviewed and appropriately labeled.  

Educating customers about the strength of various products can reduce the risk of any surprise complaints—and having the necessary insurance in place will safeguard your business in the event of a liability claim. 

There’s a myriad of insurance considerations as it pertains to the products you offer, the risks they present, and the necessary policy language needed to actually protect your business. 

In today’s highly litigious environment, it’s crucial to assess these exposures and safeguard against future claims. 

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 [email protected] or 626-703-1556.

Follow along with Corey on Instagram and LinkedIn for more.

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