Companies Offering Cannabis-Infused Products Face Poisoning Liability Risk | Insurance business America
The increasing availability of products is driving this emerging risk
This article was created in collaboration with Amwins Group.
Insurance Business America’s Gia Snape spoke with Norman Ives, broker and life sciences specialist at Amwins Brokerage in Los Angeles, about cannabis poisoning liability, a new risk to businesses caused by the increasing availability of THC products in consumer markets is inspired.
From edibles and e-cigarettes to marijuana-infused colas and cocktails, the cannabis industry is experiencing a surge in innovation as legalization expands and more U.S. consumers embrace cannabis. The passage of the Farm Bill in 2018, which legalized regulated hemp production, also helped accelerate the market’s growth.
Cannabinoid-based products, such as those containing THC and CBD, are increasingly being consumed outside of traditional venues. While the increasing availability of these products bodes well for the industry, companies offering cannabis products are increasingly exposed to cannabis poisoning liability.
“We are seeing an increasing proliferation of low-dose THC drinks available to the general public outside of a dispensary,” said Norman Ives (pictured), broker and life sciences specialist at Amwins Brokerage in Los Angeles.
“Just three to five years ago, the ability to consume cannabis in commercial spaces was limited to pharmacies. It was seen primarily as a way to provide legal consumption options to tourists and those who cannot consume where they live. Today, as societal acceptance of cannabis increases, we are seeing these products becoming available in a wider variety of locations and social circles.”
What is liability for cannabis poisoning?
Liability for cannabis poisoning reflects the well-known concept of alcohol liability. Businesses at highest risk for cannabis poisoning include bars, taverns and entertainment venues.
“If a venue serves too many cannabis products to an individual and that is deemed to be cause for a loss, that business owner could be held liable for those losses,” Ives said.
Liability could even extend to cannabis industry events, such as conventions.
“At afterparties at conventions and events, you could give out free products and allow samples to be consumed,” Ives continued. “There is a very real risk of liability for impairment that people are not aware of, and there is the potential for a promoter or venue owner to become involved in claims for which they may not be prepared.”
The type of THC consumption varies from person to person; What might be a mild dose for one person can have significant effects on another. This variability in tolerance levels highlights the complexity of managing the risk of cannabis poisoning for organizations.
Where does this leave entrepreneurs in terms of risk management? Education is the first step in mitigating potential risks. Ives urged companies offering THC products to be aware of the coverage gaps in their current insurance policies and to act proactively to understand and address cannabis liability.
“Your event insurance probably doesn’t cover cannabis intoxication. There are probably some pretty strict rules around alcohol impairment as well,” he said. “Cannabis poisoning needs to be another consideration, especially in states that allow on-site consumption at venues.”
Carriers are opening up to cannabis liability insurance
When it comes to coverage options for cannabis poisoning liability, the market is still evolving. Although some airlines are willing to consider this risk, participation remains limited.
However, Ives expects more carriers to enter the market and offer a wider range of options to companies seeking coverage.
“It really depends on the nature of the risk,” he said. “But carriers are becoming more accustomed to the cannabis industry segment and are looking for ways to expand their coverage offerings.”
Due to limited coverage options for cannabis poisoning liability, it is essential to work with experienced wholesale brokers who can navigate the market. Ives noted that carriers want to know information about an insured’s risk control processes for shipping cannabis products.
“It’s a complex submission process,” he said. “To find good options, you need to work with an experienced agent.
“As it is an emerging segment, there are not many good add-on applications. So you have to examine the risk and understand your customer’s operations.”
Ives said a number of carriers are open to monoline coverage or expanding coverage on an existing dispensary business or licensed cannabis lounge policy. Working with wholesale specialists like Amwins can help retail agents add value when placing cannabis impairment liability insurance.
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2024-04-26 15:30:15
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