The media is currently abuzz about the inadequacy of lab testing for marijuana and marijuana infused products, which once again raises a critical issue for business owners: lawsuits. There are circumstances under which marijuana producers, processors and retailers alike can be held liable for a defective product, even without any knowledge of the defect. Anyone in the chain of product distribution, whether or not they grew or produced the defective product, may be held liable if the product makes a consumer sick.
In an attempt to curb potential liability, as well as to comply with state law, producers and processors turn to testing labs to determine the potency and the mold, mildew, fungus and pesticide content of their products. The problem is that scientific protocols followed by marijuana testing labs are not always accurate.
A compelling potency analysis study conducted by The Oregonian found that of fifteen marijuana-infused edible products sold in Portland dispensaries, “only one contained accurate potency information on its label.” These results should be distressing to cannabis business owners who regularly obtain purported potency levels that vary wildly depending on which lab conducted the analysis. Though the majority of products tested contained less THC than claimed, one product contained significantly more. And although consumers can sue for false and misleading advertising when a product is less potent than claimed, a consumer who suffers side effects from a product more potent than claimed could end up bringing a products liability case. Labeling products with an accurate potency level must be a top priority for marijuana producers and processors.
In addition to inaccurately represented THC content, a recent piece by the International Business Times reported a study which found that marijuana in Colorado is often tainted by pesticides, heavy metals and fungi — this is the stuff products liability lawsuits are made of. Though Colorado law requires marijuana producers to test their product for both potency and impurities, this study shows that enforcement of purity requirements has been insufficient. In Washington State, for example, thirteen percent of cannabis products were rejected by officials for contaminates like E. coli, salmonella and yeast mold. If testing requirements for marijuana are not enforced and contaminates like these reach consumers, products liability lawsuits will be inevitable. One such lawsuit could be enough to shut down a marijuana business, be it for damage to reputation or just an inability to pay the money damages.
Marijuana business owners must make sure that they are working with reputable testing labs and they should obtain multiple sets of analyses if possible. They also must be sure to label their products accurately. Don’t think that using creative sampling techniques to get your product through the testing process is a good idea. If the test results come back clean, but your product makes a consumer sick, you will still be liable. Here are some of the tips we’ve previously shared on how you can protect your business from product-related lawsuits:
- Set up your cannabis business to protect yourself from personal liability. For more on this, check out Cannabis Businesses And Corporate Separateness and Cannabis Business and Corporate Separateness, Part II.
- Vet both the manufacturers with whom you work and the products you sell.
- Use appropriate packaging and warning labels on the products you sell. For more on this, check out Cannabis Products and Dosing: Educate, Educate, Educate and Label, Label, Label and Pot Puppies? Let’s Talk Labeling and Packaging. NOW.
- If you are a retailer, have contracts with your manufacturers that specify the manufacturer’s product safety requirements, the manufacturer’s liability for defects or other problems, the manufacturer’s agreement to fund your defense costs if you are sued over a problem arising from the manufacturer’s product, and the requirement that the manufacturer maintain adequate insurance.
- Get good insurance for your business.
Oh, and be careful out there.