Quick Answer: If someone gets hurt or you get sued, you are going to wish that you had it.
We recommend that you do get product liability insurance for your cannabis business.
The protection that product liability insurance provides includes not only payment for injuries your product may cause to a person, but it also includes payment for your defense costs.
Product liability defense attorneys tend to charge $400+ per hour, and legal expenses can increase quickly. It is important to keep in mind that product liability cases typically include everyone involved in the delivery of the cannabis product, such as the producer, processor, marketing consultant, packaging designer, and retail store. In other words, it doesn’t matter if you make the product or not—if you transported it or sold it, you could also be sued…and lose.
View other frequently asked questions that our Cannabis Team has answered. And, for some possible life scenarios where product liability insurance could help you, look below:
Product Claim Example 1: Seals were improperly done on some vape juice.
This could go so many ways and end up so very bad for your profits, stress levels, and more.
- The improper seals caused a major leakage while transporting. The transporting company now wants you to pay for damages done to their vans, and the retail store that you promised the goods to now wants a refund.
- Seals not working properly caused something nasty to get inside the juice—like mold. Some clients got very sick. Hospital bills and lawsuits are now coming out of your ears.
- An employee goes to unload the recent delivery in the backroom. The boxes are sticky, and they created a puddle on the floor. The employee trips and falls in the liquid, hitting their head and hurting their back badly. They must get rushed to the ER. Do you have workers compensation if you are the retail store? Do you have product liability insurance if you are the factory that sealed the product?
Product Claim Example 2: Your container of pre-rolled joints has a major design flaw…It is missing the warning label—and you sold some.
Yikes. Not only is that cringeworthy because it is against the law, but it can also result in hefty fines and YEARS of court dates.
- Retail stores in these types of situations can get slapped with some hefty fines for (1) not proofreading the product labels well enough before they were printed, and for (2) not giving the product a thorough lookdown after receiving the delivery and before stocking the shelves. If a customer decides to sue, a pot store can be seen as at fault in a court of law. All a customer would have to do is adequately prove that they had an injury or loss that can be linked to the misprinted label.
- If you are a marketing agency and you created the label for the retail store, your editing process is going to be under major scrutiny. Not only can the state go after you, customers and the retail store can as well. Employees have also been known to get fired (and sued individually) for this kind of mistake.
Product Claim Example 3: A customer is claiming that one of your products caused health issues or death.
All you need to do is stay up late watching TV and you will hear all kinds of infomercials starting with “Did you or a loved one get diagnosed with BLANK? You may be eligible for financial compensation…” Any business can get sued for a product or service that they provide. If an individual who purchased something from you believes that it caused them harm in some way, they can serve you with court papers. There have also been cases where someone has died, and their family goes after a company with accusations that they caused the death.
It is important to keep in mind that even if the lawsuit is bogus, or the case is dropped due to inadequate proof, you are still looking at court fees, attorney fees, time-wasted, and stress. Liability insurance can help pay court fees regardless of fault, and it can help protect you if you are found at-fault.
- One of your customers purchased your vape juice and claimed that they made them sick. They were throwing up for days and had to go to the hospital because they lost consciousness. They were not able to work for two weeks and are coming after you for medical bills and lost wages.
- A long-time client for many years suddenly drops a lawsuit in your lap. They are claiming that your CBD topical lotion gave them skin cancer, and now they are suing you for medical treatment compensation, hospital bill reimbursement, and pain and suffering. They also happen to be a professional model, so you are also getting sued for lost wages and ruining their career.
- Someone had a horrible seizure one day that happened to be after they consumed your cannabis edibles. They unfortunately never recovered. Hearing about their daughter’s death and learning of her stomach contents and your product package in her pocket, her parents are now suing you, saying that you are liable for their daughter’s death. This type of thing can happen—like the death of the flight attendant from Alabama who died on a plane in California after eating a tropical hybrid gummy back in October of 2020. Read the story here.
- “Cannabis made me do it…” Luckily, there was a break in the case.
We didn’t pull those ideas out of nowhere.
We have been around since 2010, and in the cannabis insurance industry since 2012. Many of our agents have over 15 years of insurance experience, and some as much as 30+ years. Between all of us, we have endless stories. We have helped all kinds of individuals and businesses review their claim history and lifestyle to decide the best carriers and coverages for their needs. Tailoring insurance is what we are here for.
If you want to ask us some questions, talk to our marijuana insurance agents about what insurance is recommended for a company like yours, and/or find out how much different coverages would cost your business, reach out! You can call us, send us an email, send us an IM in the chat feature here on our website, or fill out our quote form. You can also reach out to us and ask us about setting up a video conference.
Since insurance quotes are free, we do the legwork, and we come to you with different carrier options, why not?
