What Liability Do Cannabis Product Manufacturers Have?

As manufacturers of cannabis and hemp continue to come up with unique ways to incorporate their product into oils, candies, baked goods, and other edibles, concern for marijuana liability insurance continue to rise. Ensuring that a company that produces any form of cannabis or hemp should be concerned with the correct and appropriate product liability insurance.

Cannabis Product Manufacturers: Is Product Liability Insurance Needed?

For anyone who produces a product containing any form of cannabis or hemp into any ingestible or edible product, product liability insurance is a must. Any potentially negative effect that surrounds the use or consumption of a product manufactured by a company needs to be covered by a comprehensive product liability insurance policy. Some examples of needed product liability insurance include:

• Any goods or products sold that end up in the hands of the public
• Design defects resulting in negligence claims
• Flaws in production or manufacturing
• Marketing defects such as defective or misleading instructions
• Breach of contract claim/warranty
• Strict liability

Internal Risks

Contaminants and faults that make their way into products, often hit the market before they are noticed, opening a manufacturer up to lawsuits. This difficult challenge of producing a product with zero recall claims increases as the business increases its yield and as time passes. Even if a manufacturer has never had a complaint or problem in the past, chances are that at some point, the need for marijuana liability insurance coverage will be a need.

External Risks

Due to the nature of the cannabis industry, entrepreneurs face many challenges not seen by other established industries, such as federal laws, prejudice against those in the industry, a lack of available insurance products pertaining to marijuana liability insurance from the insurance industry, and a lack of raw data that limits insurance coverages.

Since companies in the cannabis industry tend to be notoriously underserved by the insurance industry, many of these legitimate companies struggle to obtain marijuana liability insurance coverage that meets their individual company needs. Until the federal government legalizes marijuana nationally, the cannabis industry will continue to be treated unfairly.

Limited coverage available to the cannabis industry adds another stressor to running a business. With both internal and external risks, finding a comprehensive marijuana product liability insurance package is often hard to find and more costly for businesses that purchase them.