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A cannabis retail sells flower, edibles, and concentrates or cannabis manufacturer processes the plant material into concentrates to be used in baked goods. Both of these business operations either sell a product or manufacture a product to be sold for profit. Product liability is a type of coverage for the risk associated with cannabis and its derivatives entering the stream of commerce and causes harm or damage. As an example, a customer or patient suffers harm after smoking your product and incurs medical bills and unable to work. They decide to hire a lawyer in order to recover their loss of income and medical bills.
Essentially, they are making your cannabis operation responsible for their damages.
Unbeknownst to many cannabis operations, most commercial general liability policies exclude what is known as products and completed operations. Essentially this means you have no coverage for your product liability. Below is a sample declaration page indicating the coverage is excluded:
In order to protect your company from a product liability lawsuit using insurance, the purchase of a separate policy is typically required. The following are important factors to consider when purchasing this type of coverage:
This is a difficult question to answer as there are many factors involved such as the type of operation, annual revenue, coverages, and product sold or manufactured. The premium range can be from a couple of thousands per year and up.
Below is a sample product liability comparison from three different insurance carriers. The price is impacted for a variety of reasons. However, worth noting is certain exclusions and deductibles that could have consequences with your company. For example, if you’re a cannabis infused products manufacturer that produces oils and extracts, you may be less likely to choose Carrier B based on the Oils/Extracts for vaporizing.
The majority of product liability insurance carriers include the application as part of the policy. This can mean the carrier is attempting to use the completed application for not only policy issuance, but coverage determination should a claim arise. Carefully read through the application to be certain you have a good understanding of the questions be asked from you.
If the insurance broker completed the application on your behalf, it’s important for you to be certain the answers are correct and truthful before signing the document.
DISCLAIMER: Material presented by Owner website is intended for information purposes exclusively. It is not meant for professional insurance or legal advice, to induce or solicit new clients, and must not be construed as such. Each individual situation is unique and requires a licensed insurance broker or attorney in your state to evaluate and recommend insurance or provide legal advise respectively. Each insurance company, policy, and broker are unique with their terms,conditions, and product offerings placing the responsibility of the user to conduct and rely on their own due diligence.