Are Cannabis Retailers & Producers Liable For Consumer Harm?

Written by Cassidy Patnoe, Law Clerk at Gleam Law, PLLC. 

Legally, who is responsible for any harm caused by cannabis?

Fairly or not, marijuana has historically been linked to a number of social and personal harms such as motor-vehicle accidents, increased property crime in areas of consumption, and even violent behavior. Beyond its intoxicating effects, could issues stemming from the growth, manufacturing, and sale of cannabis-based goods potentially leave producers, processors, or retailers liable for harm caused to a consumer? So far, most product liability lawsuits relating to marijuana have been related to pesticides, mold, or other issues arising out of the growing process, but at in at least one case, a plaintiff alleged that an unexpectedly high dose of THC led him to murder his wife.

For many, legalization has alleviated fears of criminal prosecution but, as marijuana enters mainstream commerce in a country as litigious as the United States, increasing numbers of civil product liability lawsuits are inevitable. 

Product Liability For Legal Cannabis

Product liability is an area of law in which those who make products available to the public can be held responsible for the harms caused by those products. Most product liability is determined at the state level and greatly varies from state to state.

Types of Product Liability Defects

Generally, product liability is broken into three different kinds of claims:

  • Manufacturing Defect: Manufacturing defects typically occur when a product is made dangerous by the use of poor-quality materials or mistakes in the actual production of the product, rather than the product itself being inherently problematic. Marijuana contaminated by fungus or pesticide could fall into this category.
  • Design Defect: Design defects, on the other hand, are found when the product design itself is inherently dangerous in such a way that an ordinary consumer wouldn’t expect. Health issues directly arising from the consumption of marijuana could arguably be considered design defects.
  • Marketing Defects (also known as “failure to warn”): Marketing defects are those which occur in products that have an inherent, but non-obvious, danger. Edibles with unusually high concentrations of THC likely fit this label.

 

Typically, these risks can be mitigated by warnings on the products themselves. Where cannabis and cannabis-derived goods fall on this scale can be complex.

Cannabis Product Liability Lawsuits

Colorado has seen some fairly high-profile product liability lawsuits since legalization. The first, 2015’s Flores v. LivWell, Inc., revolved around the use of a fungicide on marijuana. When burned, the plaintiffs contend, this fungicide produces poisonous hydrogen cyanide gas. While the plaintiffs in this case did not claim to have been directly harmed by the product, they contend that the failure to disclose the use of the fungicide was essentially a marketing defect; they would have made different purchasing choices if the product had been labeled differently. While this case was ultimately dismissed, it may be indicative of the kind of future lawsuits marijuana entrepreneurs will face.

Federal Illegality of Cannabis & Its Impact On Product Liability

Marijuana’s federally illegal status does not mean producers, processors, or retailers are immune to product liability lawsuits. The Food and Drug Administration has their own process for recalling products, but does not directly deal with the cannabis products that have been legalized at the state level. The budding industry only has best practices and state-level regulations to guide it in product safety and recall, which may be challenging when the need for a recall occurs.

Furthermore, in many states, retailers can be held strictly liable for selling defective products, even if they themselves played no role in rendering the product defective. The theory behind this is, in part, that it will encourage retailers to push for safer products from manufacturers and suppliers. However, in a burgeoning field like cannabis, there are far fewer historical precedents to guide the industry and this could lead to unpleasant surprises.

Courts typically hold product manufacturers liable for placing unreasonably dangerous products on the market. However, community standards and expectations play a role in what can be considered “unreasonably dangerous.”

How Product Liability For Cannabis Differs From Alcohol

Alcohol, for example, has no shortage of associated health, social, and economic costs, yet states typically do not hold retailers or suppliers of alcohol liable for these harms, except for serving the obviously intoxicated. Alcohol has established a place in legal and social history that has allowed for the development of a body of laws and customs that regulate and mitigate liability claims related to its use.

Cannabis, however, exists in a much different space. Federal illegality has made studying the effects of cannabis use difficult and regulatory guidelines for safe use are essentially non-existent. From a federal level, the Controlled Substances Act still defines marijuana as a “schedule 1” drug, which means that it has a high potential for abuse with no medical use. Regardless of the attitude of the states who have allowed legalization, on a federal level, marijuana could be found to be an unreasonably dangerous product in a products liability lawsuit.

Marijuana edibles, with their slower onset time and greater challenge in metering dosage, provide a uniquely troublesome area for product liability. Inconsistency in potency, mislabeling or misunderstanding of packaging, or even consumer ignorance may be grounds for a products liability lawsuit if harm occurs. The ease of consumption may lead to inadvertent overconsumption. While some states have begun to require packaging that physically separates each measured dose, community standards and expectations may be hard to prove because of the historically underground nature of cannabis consumption. All these factors could come into play in court and, with so little judicial precedent, the outcome of a products liability suit around marijuana is uncertain for both plaintiff and defendant.

More positively, the cannabis industry and state regulators seem to have learned from historical troubles exemplified by the dietary supplement industry. In the wake of the 1994 Dietary Supplement Health and Education Act, many potentially dangerous dietary ingredients were grandfathered in and sold without restriction or warning. The ensuing lawsuits not only bankrupted a number of companies, but also highlighted the lack of adequate insurance coverage for product liability issues. Some states are expanding their minimum coverage requirements and most states are working to nip potential liability issues in the bud through mandatory product testing, traceability programs, and even engaging in product recalls. While these regulations and processes can be onerous for those working within them, the silver lining may be that they help protect the consumer from faulty products and the distributors from ensuing products liability lawsuits.

 

Understanding liability and regulatory expectations in the world of cannabis is difficult. Seeking out experienced legal counsel may help you avoid costly delays and lawsuits. If you are concerned about potential liability issues or any other aspects of working in the cannabis industry, Gleam Law, PLLC has years of experience working with cannabis clients and navigating the legal and regulatory expectations of the growing and changing market.