Time and again I have warned industry participants that federal prohibition means nothing when it comes to liability created by defective products. Colorado is a prime example of the threat and power of marijuana product recalls. And though we’ve seen various cannabis businesses in Colorado pull their products from the shelves for illegal pesticides and/or manufacturing under unsanitary conditions, we have yet to see a single product recall in Washington state. Bob Young from the Seattle Times confirms this:
Washington state hasn’t recalled any products for pesticides during the 18 months that legal pot sales have been allowed. The city of Denver, by comparison, recently recalled 19 pot products for pesticides in 19 weeks.
Unlike most states with robust marijuana regulations, Washington state does not have any protocol in place for how either consumers or businesses are supposed to deal with tainted or defective marijuana products. Washington instead relies on random inspections and third-party complaints to determine such violations and then accesses penalties for that range from monetary fines to suspension and/or cancellation of licenses.
My sense is that states sometimes get so caught up in rule making to appease the Federal government and its many rules relating to things like advertising to kids, security and traceability, and restrictions on vertical integration, they completely forget about consumer protection and safety issues. I expect Washington state will soon change its tune and start enacting comprehensive regulations to address cannabis consumer safety and protection simply because consumers are at risk without it.
Though Washington does not have mandatory pesticide testing for cannabis, the Department of Health has proposed rules to address pesticide residue testing as required by Senate Bill 5052. But for now anyway, Washington cannabis consumers are forced to take marijuana cultivators at their word when they claim not to be using certain banned pesticides or chemicals on their products. I wrote about this issue last year when Noelle Crombie from the Oregonian broke a significant story about similar issues in Oregon. Without pesticide testing, it truly is buyer beware in the marijuana marketplace.
One of the main issues here in Washington for both the cannabis industry and its consumers is that there is no established method for determining safe levels of pesticides for marijuana since the federal government does not generally permit research into the issue and the Environmental Protection Agency has no approved list of pesticides for cannabis (though it is slowly working on the issue).
If you’re a cannabis consumer, do you want to take the chance with cannabis that may contain unapproved pesticides and chemicals? And, if you’re a cannabis business, do you want to take the chance of putting those products into the marketplace?
In December of last year, two large-scale Washington cultivators were busted for using impermissible pesticides on their crops. The Washington State Liquor and Cannabis Board only found out about their pesticide use via third-party complaints. And though the Board issued a stop sales order against both companies, that order was not announced to the public and it only came to light through a public records request. It’s fine that the Board eventually discovered these pesticide practices, but what about the marijuana and/or marijuana products that made their way to consumers? What should those consumers do? What redress do they have? What about other companies that purchased this cannabis? What redress do they have?
No recalls against either of these two Washington cultivators have yet been mandated or reported and state health officials claim they don’t believe such recalls are warranted since the amount of pesticides used was allegedly “negligible.” But market fall-out from these incidents has already begun. Ian Eisenberg, owner of Seattle’s extremely popular retail marijuana storefront, Uncle Ike’s, told the Seattle Times that “[w]e’re (expletive) furious . . .” and that, even if health risks are unknown about some unapproved pesticides, “there’s no reason for a store like us to even take a risk with tainted products.” Eisenberg is right to be angry. In addition to the reputational risk posed by the situation, retailers can be held liable for putting tainted cannabis into the marketplace, even if all they did was buy it for resale. In Colorado, discovery of the application of illegal pesticides to marijuana and marijuana products by a cultivator in Denver led to a class action breach of warranty lawsuit.
At minimum, every marijuana business (in Washington state and elsewhere) should be prepared to issue a recall even if their state doesn’t yet have its act together enough to require one. To prepare for that, every marijuana business should have a recall plan in place and ready to go and should know whether it has insurance to covers recalls and products liability claims. Because even if you can pull and re-purpose your tainted products and/or survive a products liability suit, you cannot repair your reputation after-the-fact. And the Washington marijuana market is likely soon going to find this out.