The Importance of Product Liability Insurance in the Cannabis Industry

The cannabis industry is growing exponentially, making it an attractive business opportunity for many newcomers. But with so many areas for growth, there’s also increased chances of errors. This is why product liability insurance is one of the primary concerns that cannabis business owners have.

Cannabis liability insurance differs slightly from traditional liability insurance due to the higher risks involved. This is why you must get an insurance provider such as Alpharoot that covers many liabilities, including physical injuries and property damage. 

In this article, let’s take you through the basics of product liability insurance, its coverage umbrella, and why it’s so important. 

Why Is Product Liability Insurance So Important?

Product liability insurance protects you from claims of injury or damage related to your product once it’s been sold. These can be on or off-site. 

When it comes to cannabis businesses, there’s usually a long supply chain that follows. Still, regardless of where in the supply chain you come in, product liability insurance is a must. For retailers, this becomes exponentially important because if there’s any issue with the product, they’ll be the customer’s initial line of fire. 

Cannabis products usually undergo third-party testing, and errors can occasionally occur. Plus, sometimes the product may come mislabelled from the backend or may not experience a strict quality control check. Sometimes, a product can also be mishandled and contaminated with bacteria or fungi, which can cause serious illnesses. 

The slightest error in supply chain management can lead to serious lawsuits for your company. This is where product liability insurance comes in. Not only does it help in claims management, but it also ensures that your company meets all regulatory compliances and manufacturing standards set by the state. 

Liability Coverage Provided By Cannabis Insurance

Customers can face physical or financial losses that may be directly or indirectly linked to a cannabis product that they had. In such cases, cannabis business owners could likely face a lawsuit. Luckily, Product liability insurance coverage includes everything from financial losses to injury and even property damage the consumer faces. 

Here are a few things that the product liability insurance will protect you from:

Adverse Reactions

These can include anything from standard THC overdose side effects such as lightheadedness or panic and anxiety attacks. Some users can also have allergic reactions due to traces of allergens or pesticides not mentioned on the packaging. 

Plus, if you’ve got marijuana products lying on the shelf for extended periods, they may grow small amounts of fungi that could make you sick. 

Your liability insurance will, therefore, cover all the consumer’s legal fees and medical costs that may result from these reactions. 

Physical Injuries

Marijuana and its products are known to alter your consciousness levels and decrease reaction time. As a result, the consumer could trip and fall and injure themselves after consuming your product. This usually happens if the potency and dosage are higher than that mentioned on the product. 

Most dispensaries may not be held responsible for this since they simply sell prepackaged products. But if your dispensary does in-house packaging and small-scale manufacturing, your business can be at risk from such claims. 

Product liability insurance will also cover all hospital bills and lawyer fees. 

Property Damage

Although this is quite rare if your business sells e-cigarettes, a faulty battery can catch fire and, if kept near a flammable object, can cause significant property damage, in such cases, the customer will undoubtedly come knocking at your door with a hefty lawsuit. 

Liability insurance will help cover property and personal damages alongside legal fees to avoid potentially bankrupting your company from this lawsuit.

Possible DUI and Other Fines

If a consumer uses a product that is more potent than mentioned on the packaging and drives under the influence, they could face serious fines and even jail time. In such cases, they could sue the company for wrongful advertisement. 

Liability insurance will, therefore, provide legal protection and pay any fines and legal fees the consumer faces. 

General Liability Insurance Vs. Product Liability Insurance

The primary difference between standard and cannabis liability insurance lies in underwriting. 

It’s no secret that the cannabis business is a higher-risk business due to the potential adverse effects of consuming cannabis and its derivates. Unfortunately, higher risk also means higher insurance fees. 

Insurance companies will likely put you through strict underwriting processes and fully evaluate your risk management strategies. This can include an in-depth analysis of your product safety standards, health and safety regulations, quality control, and more. 

Some states in the US require companies to have a certain type of product liability coverage and specific documentation. 

With all these strict policies, getting exploited or having improper documentation for your business is easy. This is why working with a trusted insurance provider such as Alpharoot is vital.

Conclusion

Undoubtedly, product liability insurance is a vital part of the cannabis industry. It protects you from financial and legal damages that could potentially bankrupt your entire business and give you peace of mind.