Navigating the Hazy World of Cannabis Product Liability

06/21/2023 Written by: Doug Esposito

The American cannabis industry is facing a complex and constantly evolving regulatory landscape, with an incoherent patchwork of rules and regulations that can be difficult for even the most seasoned minds in compliance to navigate. This has created significant compliance challenges for cannabis companies trying to navigate product liability issues, including the ongoing blight of product recalls. The lack of uniformity in product testing requirements, packaging, and labeling has made it difficult for companies to ensure that their products are safe and accurately labeled.

Insurance companies have varying definitions of what is covered, and those with broader definitions often restrict their coverage in other ways. This has created a nightmare for cannabis companies, who must carefully select insurance policies that provide adequate coverage while minimizing their exposure to major lawsuits.

Making things even more difficult is the emergence of novel cannabinoids.  As new compounds are being discovered and brought into the mainstream, the need for clear and consistent regulation of the cannabis and hemp industry is urgent.

To address these challenges, policymakers, industry leaders, and consumers must work together to create a regulatory framework that protects public health and safety while supporting the growth of the cannabis industry. This should include clear guidelines for product labeling, testing, and dosing, as well as provisions for product recalls and liability. Additionally, the framework should support ongoing research into the therapeutic potential of cannabis, including novel cannabinoids, in a manner that ensures the safety and efficacy of new compounds before they are introduced to the market.

Without sensible and congruous regulations, companies may be forced to operate in a legal gray area, increasing the risk of non-compliance and potential harm to consumers. To learn more, read this article by AssuredPartners’ Cannabis Practice leader or contact AssuredPartners Agribusiness.

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